The Lynas Rare Earths Ltd (ASX: LYC) share price was a strong performer on Tuesday.
The rare earths producer's shares ended the day 5% higher at $8.14.
Image source: Getty Images
Why is the Lynas share price rising?
Investors were bidding the Lynas share price higher today after investors flooded back into the market again following several tough sessions.
This led to the ASX 200 index rising a sizeable 1.2% on Tuesday with the S&P/ASX 200 Resources index doing a lot of the heavy lifting with its gain of 2.6%.
Can its shares keep rising?
One leading broker believes the Lynas share price still has plenty of upside ahead.
According to a recent note out of Goldman Sachs, its analysts only have a neutral rating on its shares but their price target of $9.10 is meaningfully higher than current levels.
In fact, this price target implies potential upside of almost 12% for investors over the next 12 months.
Goldman commented:
NdPr market to remain in deficit beyond 2025 based on our NdPr SD model incorporating our global 2030 wind & EV targets and ex-China mine supply forecasts. Current NdPr spot China is ~US$93/kg
Upsized LYNAS 2025 target (12ktpa NdPr) but at higher capex of ~A$1.4bn, where we continue to see execution and capex risks. US gov refinery deals for construction of a light rare earth (LRE) plant (~50% of total ~US$60mn cost) and commercial Heavy Rare Earths (HRE) separation facility (100% of total US$120mn cost) are incremental, where we expect the direct sale of ~0.5ktpa of high value HRE (mostly Dy & Tb) to US customers likely improves realised HRE pricing.
We see the stock as fairly valued at A$8.25/sh on a DCF basis (~1.1x NAV) based on our long run US$80/kg (real $, from 2026) NdPr price forecast.
As covered here, Goldman prefers Iluka Resources Limited (ASX: ILU) for rare earths exposure.
