MP Materials Corp. (MP) Surges 6.0%: Is This an Indication of Further Gains?
MP Materials Corp. (MP) shares ended the last trading session 6% higher at $24.55. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1.2% gain over the past four weeks.
MP Materials’ shares have gained on the news that effective Aug 1, 2023, China is set to impose restrictions on exports of gallium and germanium due to national security reasons. These metals are used in making semiconductors and other electronic parts.
As per the new regulations, exporters will be required to obtain a license to ship these metals. Applications for the licenses must identify importers and end users and state how these metals will be used.
This move is being seen as China’s retaliation to the U.S. curbs on sales of key technologies to the country. It has fueled concerns that China might eventually curb exports of rare earth metals. Notably, China accounts for around 70% of total global rare earth production. MP Materials, which owns and operates Mountain Pass, the only integrated rare earth mining and processing site in North America, stands to benefit from this move.
This company is expected to post quarterly earnings of $0.07 per share in its upcoming report, which represents a year-over-year change of -83.7%. Revenues are expected to be $65.76 million, down 54.2% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For MP Materials Corp., the consensus EPS estimate for the quarter has been revised 9.8% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on MP going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
MP Materials Corp. belongs to the Zacks Mining - Miscellaneous industry. Another stock from the same industry, Silica Holdings (SLCA), closed the last trading session 0.9% lower at $11.96. Over the past month, SLCA has returned -3.5%.
Silica Holdings' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.45. Compared to the company's year-ago EPS, this represents a change of +40.6%. Silica Holdings currently boasts a Zacks Rank of #3 (Hold).
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