Lynas Rare Earths Ltd (ASX: LYC) shares have been in sensational form this year.
Since the start of 2025, the rare earths producer's shares have risen a massive 130%.
This begs the question: have investors missed the boat with this one?
Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about this high-flying stock.
What is the broker saying?
Macquarie has been running the rule over the company's quarterly update, which was released earlier this week.
It was a touch disappointed with the update, noting that its revenue missed expectations despite higher than expected sales volumes. The broker said:
Sales miss: While total REO sales beat by 8%, revenue was a miss of 12% driven by a 21% miss on average realised prices. Weak pricing was a key disappointment and a surprise given NdPr prices improved QoQ (+27%) and against a backdrop of strong market sentiment.
One positive, though, was an announcement made the day before its update, which revealed plans to expand its heavy rare earths (HRE) capacity. Macquarie adds:
LYC recently announced its plan to expand HRE separating capacity with the construction of a new facility in Malaysia. This project would increase LYC's HRE separation capacity by 5ktpa feedstock. The company has signed its first customer for its Heavy Rare Earth oxides (Dy, Tb) with no price disclosure. We note total production of HRE was 9t in the quarter.
Macquarie also highlights that there is uncertainty in relation to China's export controls. If it does pause its controls, the broker thinks it could impact Lynas. It explains:
Media reports post the recent "Xi and Trump" meeting indicated that China could pause rare earth export controls for one year. Cooling sentiment could slow down LYC US facility progress, in our view. LYC also noted the project is currently facing significant uncertainty, while pivoting to increased investment in Malaysia. As such, we remove US facilities from our base case.
Should you buy Lynas Rare Earths shares?
According to the note, Macquarie thinks investors should keep their powder dry for the time being and wait for a better entry point.
This morning, it has retained its neutral rating on its shares with a reduced price target of $17.00.
While this still implies double-digit upside, the broker doesn't appear to believe the risk-reward is compelling enough to recommend it as a buy. It concludes:
Neutral: LYC's 1QFY25 result missed on revenue, price and NdPr production. The company continues to execute its 2030 plan with HRE circuit expansion announced recently. We continue [to] see LYC as the only ex-China REE producer at scale, which we believe deserves a premium.
