Shares of Molycorp (MCP), the largest U.S.-based rare earths miner, are up 2% after Dahlman Rose, one of the first research firms to place a lofty price target on the stock, said plans by Molycorp insiders to sell 11.5 million shares in a secondary offering may create a slight near-term overhang, but does not alter the company’s fundamental valuation over the long-term.
It looks like investors agree with the comments, at least for today, as the Rare Earths Stocks Index is higher by 1.4%. However, in a regulatory filing, Colorado-based Molycorp said a loan guarantee application has been put on hold by the Department of Energy, indicating the firm may not have the funding in the time in which it was needed.
Dahlman Rose said the company could sell debt or use cash flow from operations to bolster its balance sheet. Earlier this month, Dahlman Rose raised its price target on Molycorp to $125 from $85. The firm rates the stock a “buy.”