Lynas Rare Earths Ltd (ASX: LYC) shares have plunged since February, but could this be an opportunity?
Lynas shares have shed 20.82% since market close on 1 February and are now priced at $7.68 apiece. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) has dropped nearly 5% during the same time frame.
Let's take a look at the outlook for this ASX rare earths share.
What's on the cards?
Lynas Rare Earths is producing rare earths from the Mt Weld mine in Western Australia. The company also operates rare earths processing plants in Malaysia and Kalgoorlie.
One analyst recommending Lynas shares as a buy is Fairmont Equities managing director Michael Gable.
Gable is optimistic Lynas will attract more investors, despite being "oversold" in recent times. Commenting on The Bull, Gable said:
LYC shares were recently oversold on the back of concerns that production would be impacted when LYC switched to its new processing plant in Kalgoorlie.
With an extension granted to its Malaysian plant, LYC won't lose any production time. Combined with improving sentiment in the resources space, we expect the stock to attract more buyers at recent prices.
On the flip side, Goldman Sachs slapped Lynas with a $6.90 price target last month, implying a 10% downside for the share price.
However, Macquarie placed an outperform rating on Lynas while Bell Potter lifted its 12-month price target on the company's share price to $8.90.
In early May, Lynas received positive news that it will be able to keep operating its Malaysian processing facility until 1 January 2024. This follows Lynas' appeal to Malaysia's Minister of Science, Technology and Innovation. Previously, Lynas had advised it would need to shut down the Malaysian facility in July.
Share price snapshot
The Lynas Rare Earths share price has lost nearly 10% in the past year.
This ASX rare earths share has a market capitalisation of about $7.1 billion based on the latest share price.
