The Lynas Rare Earths Ltd (ASX: LYC) share price has taken a real beating in 2023.
Since the start of the year, the rare earths producer's shares have fallen almost 17%.
However, that doesn't take into account the very strong start to the year that its shares had.
The Lynas share price was up as much as 24% year to date at the end of January. So, from the top, the company's shares have lost almost a third of their value.
This has been driven largely by comments out of Tesla, which revealed that the electric vehicle giant is planning to stop using rare earths in its vehicles.
In addition, news relating to its Malaysian licence weighed on its shares. That news reveals that its licence has been renewed but will now prohibit the import and processing of lanthanide concentrate after 1 July 2023.
These processes will have to be undertaken at Lynas' Kalgoorlie Rare Processing Facility once operational.
Image source: Getty Images
Is the Lynas share price good value under $7?
Analysts at Bell Potter believe that the recent weakness in the Lynas share price has created a buying opportunity.
So much so, the broker has just upgraded its shares to a buy rating with a trimmed price target of $8.06. This implies potential upside of 23% for investors from current levels.
The broker believes there's plenty of growth opportunities for the company outside Tesla. It commented:
We argue yes, despite near-term earnings risk perpetuated by the commissioning of Kalgoorlie (and replacement of Malaysia), a weaker near-term NdPr price (on the back of increased Chinese production quotas) and Teslas move to replace rare earth permanent magnets, we believe the recent ~34% sell-off to be largely overdone.
[W]e adjust our production and revenue outlook on a constrained ramp up at Kalgoorlie and lower near-term NdPr prices and adjust for the issue of new securities. Whilst the near-term risks are undeniable, we fundamentally believe LYC to be the sector leader in the Rare-earth space, with a sound balance sheet, multiple long-term growth pathways underpinned by arguably the best rare-earth deposit at Mt Weld.
