Lynas Rare Earths Ltd (ASX: LYC) shares have been on fire over the past 12 months.
During this time, the rare earths producer's shares have risen more than 150% to $19.68.
Let's see what one leading broker is saying about this high-flyer this week.
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What is the broker saying?
The team at Wilsons is feeling positive on the company due to favourable rare earths supply-demand dynamics. It said:
The rare earth market is benefiting from a powerful combination of structural demand growth, constrained supply and increasing policy support for ex-China supply chains. These dynamics are expected to support elevated rare earth prices while also strengthening demand for, and the pricing outcomes of, Western supply in particular.
Against this backdrop, established ex-China producers are particularly well positioned to benefit from the emerging bifurcation of the rare earth market. In this context, Lynas Rare Earths (LYC) stands out as the world's largest producer of separated rare earth oxides outside of China and one of the few scaled ex-China producers positioned to capture stronger pricing across both light and heavy rare earths.
The broker highlights that Lynas is well-placed to benefit from a favourable policy backdrop for Western producers. It adds:
Lynas' status as the largest producer of rare earth oxides outside China positions the company to benefit from the favourable policy backdrop for Western producers amidst efforts to onshore critical minerals supply chains. This was evidenced in 2022 when Lynas was awarded a US$120m grant from the U.S. Department of War to develop a heavy rare earths (HRE) separation facility in Texas, although the ultimate development of the project remains uncertain.
Canaccord Genuity's view
Wilsons highlights that its research partner, Canaccord Genuity, has a positive view of the stock.
The broker currently rates Lynas shares as a buy with a $22.00 price target. Based on its current share price, this implies potential upside of approximately 12% for investors over the next 12 months.
Canaccord Genuity commented:
Sector leader with immediate exposure to pricing rally and potential upside from downstream integration into magnets. Possible beneficiary of Australian Critical Minerals Reserve floor pricing.
Overall, this could make it worth considering the miner if you are looking for exposure to this side of the resources sector.
