What's the outlook for the Lynas (ASX:LYC) share price?

It's been a mixed year on the ASX for the rare earths producer. So what might the future hold? We take a closer look.

| More on:
Man in yellow hard hat looks through binoculars as man in white hard hat stands behind him and points.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Lynas share price is slipping today but is well in the green over the past month 
  • Lynas is the only significant rare earths producer outside China 
  • One fund manager recommends holding Lynas due to its global strategic significance 

The Lynas Rare Earths Ltd (ASX: LYC) share price is in the red year to date but has surged more than 11% in the past month.

Lynas shares are currently swapping hands at $9.72, a 5.17% fall on yesterday's closing price. In comparison, the S&P/ASX 200 Index (ASX: XJO) is also down 0.7% today.

So what does the future look like for Lynas?

Rare earths producer

Lynas is the only major producer of separated rare earths outside of China. The company's Mt Weld mine in Western Australia is one of the highest grade rare earth deposits in the world, according to the company. Lynas also operates a rare earth processing plant in Malaysia. These materials are then exported to Asia, Europe, and the United States.

Red Leaf Securities chief executive John Athanasiou recently told my Foolish colleague Tony if the market closed tomorrow he would want to hold Lynas given its "global strategic importance".

He explained:

Rare earth materials are required for all sorts of things that we consume on a daily basis — from electric cars, mobile phones to superconductors. And the western world really wants a producer outside of China, so it enhances strategic importance. 

They announced recent record sales revenue of, I think, $202 million dollars. And that's despite supply chain [issues], which we think will be resolved fairly soon. So there's even more upside to them. So I think if you hold Lynas now, you'll be happy in four years' time.

Speaking at the Australian Financial Review Business Summit in Sydney recently, Lynas CEO Amanda Lacaze said when she first joined Lynas her vision was to return to the ASX 100 and now the company is "knocking on the door of the 50".

Lacaze, asked where she sees the company in 2050, said:

We have a 25-year mine life, right? We are exploring now so we can extend that mine life because we want to increase our production. Australia as a whole, we should be able to be very successful in this area. Because we do have this wonderful mineral endowment.

I think there's a risk sometimes we think we have to compete with each other in business. There are enough competitors out there. We can all win together if we actually work in a positive fashion together.

In early March, Macquarie released a positive broker note on Lynas. The broker retained its outperform rating on the share and lifted its price target to $12.60. That suggests a potential upside of almost 30% on the current Lynas share price.

Lynas reported a record net profit after tax of $156.9 million in the company's half-year 2022 results.

Lynas share price snapshot

The Lynas share price has rocketed nearly 60% over the past year but has fallen 10% since market open on 4 January.

In comparison, the benchmark ASX index has returned about 4% in a year.

Lynas has a market capitalisation of about $9.2 billion.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

A woman in hammock with headphones on enjoying life which symbolises passive income.
Dividend Investing

Buy 300 shares in this glorious ASX 200 dividend stock and create almost $2,000 in passive income

Atop the juicy passive income, I like this ASX dividend beauty for its potential share price gains.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Resources Shares

Up 51% from their 52-week low, is it too late to buy Mineral Resources shares?

Mineral Resources has been on a tear since mid-January. Do these top brokers think it's too late to buy?

Read more »

Three satisfied miners with their arms crossed looking at the camera proudly
Resources Shares

ASX 200 mining shares charging higher amid China's $210 billion cash injection

The big three ASX 200 miners are charging higher on Friday even as the benchmark sinks.

Read more »

Two excited mining workers in yellow high vis vests and hardhats shake hands to congratulate each other on a mineral discovery
Resources Shares

What this unprecedented short squeeze signals for ASX copper stocks

ASX copper stocks have been benefiting from soaring demand for the red metal amid limited new supplies.

Read more »

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

What's the outlook for ASX iron ore shares after the federal budget?

There may be trouble ahead for the iron ore price according to broker Citi.

Read more »

happy mining worker fortescue share price
Resources Shares

How Fortescue shares could gain from the Federal budget

Fortescue could be among the ASX shares to benefit most from the new Federal budget.

Read more »

Miner looking at a tablet.
Resources Shares

ASX 200 uranium stock Boss Energy surges on copper news

Boss Energy is best known for its Honeymoon uranium project. Now copper and gold have joined the menu.

Read more »

People sitting in rows in a meeting with one person holding their hand up as if to ask a question.
Mergers & Acquisitions

Buying BHP shares? Here's what's happening with the Anglo American takeover

BHP’s Mike Henry and Anglo American’s Duncan Wanblad are manoeuvring for shareholder approval.

Read more »