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JPMorgan has been an ultra-bull on rare earth darling MolyCorp for some time.Now they’re cutting estimates.
Says analyst Michael F. Gambardella:
We are downgrading MCP to Neutral from Overweight and cutting our EPS estimates and PT to $66 (from $105) to reflect the recent drop in rare earth prices following a sharp increase over the April-July time frame. We believe a large part of this year’s run up and recent drop was caused by a host of players in China speculating on rare earth oxides. While we continue to expect the Chinese government to reduce illegal rare earth supply and consolidate (and restrict) production over time, we are taking a more cautious stance on the stock given the near-term uncertainties that have recently arisen from the news of speculation and the recent downgrade of rest of the world 2011 demand forecast from IMCOA to 40k tonnes from 60k tonnes.
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