The Lynas Rare Earths Ltd (ASX: LYC) share price has been on a downward run since falling from highs of $11.39 on 4 April.
It now trades near 52-week lows at $7.46 and is pushing south in a continuation of this trend that reinstated itself in mid-August, as seen below.
During the 2022 period, the Lynas share price has closely tracked the S&P/ASX 200 Index (ASX: XJO) into its descent, as noted in the chart below.
The question now becomes of whether the weakness in share price equates to a potential buying opportunity or not.
Are Lynas shares a buy?
Sentiment is mixed across the breadth of investors and analysts covering Lynas, potentially contributing to the volatility in its share price this year.
According to Refinitiv Eikon data, the consensus of analyst estimates projects the company to deliver $476 million in H1 FY23, stretching full-year revenue of $932.92 million, or a 1.3% year on year gain.
This is estimated to pull through to $541 million of earnings before interest, tax, depreciation and amortisation (EBITDA) in FY23, resulting in earnings per share (EPS) projections of 50.2 cents – below last year's 59.7 cents per share.
Meanwhile, 5 out of 8 brokers have it rated as a buy right now, per Refinitiv. One says to hold, whilst the remaining two firms urge clients to sell Lynas shares.
The consensus price target is $9.70 apiece, and this suggests the company could be undervalued at its current market price, should the consensus be correct.
Lynas also trades on a price-to-earnings ratio (P/E) of 13.45 times at the time of writing, well ahead of the GIC Metals & Mining industry's median P/E of 5.6 times.
It also trades a substantial premium to peers at 14.4 times cash flow from operations [price to cash flow ratio] – a substantial jump from the industry's P/Cash flow of 1.66 times.
The rare earths specialist also recognised a 39.63% return on equity and $271 million in free cash flow for the year.
Adding to this is the company's asset turnover of 0.52, implying it generates $0.52 for every $1 invested into the capital/asset base.
What this means for the company looking ahead remains to be seen. Nevertheless, the Lynas share price has re-rated and locked in substantial gains in 2022.
Shares are down almost 27% since trading resumed in January, clipping most of 2021's gains in the process.
