The Lynas share price has clocked five 52-week lows this month. Broker tips 25% upside

Lynas hit a fifth 52-week low yesterday at $6.25 per share.

| More on:
a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Lynas share price has reset its 52-week low five times this month, dipping to $6.25 per share yesterday 
  • Various pieces of news in recent times have put a dampener on the ASX rare earths stock 
  • Broker Citi has commenced coverage on Lynas with a 12-month share price target of $8.20, implying a 25% potential upside for investors who buy today 

The Lynas Rare Earths Ltd (ASX: LYC) share price has reset its 52-week low five times this month.

Talk about being dragged along the bottom, right?

The Lynas share price has been on a downward spiral since the first week of February.

It's been a rough time for shareholders — but also a buy-the-dip opportunity for true believers.

The ASX rare earths stock tumbled to $6.25 per share yesterday. Lynas is currently trading for $6.53 per share, up 1.48% on Friday so far.

Since the close on 1 February, the Lynas share price has fallen by 33%.

Let's take a look at what's going on.

Created with Highcharts 11.4.3Lynas Rare Earths Ltd PriceZoom1M3M6MYTD1Y5Y10YALL0www.fool.com.au

What's putting a dampener on the Lynas share price?

Well, the hits have just kept on coming for this ASX rare earths stock.

In early February, the company's Malaysian licence was renewed but not with the conditions it wanted. So, Lynas has begun an appeal process which is still ongoing today.

Then on 27 February, the company reported its 1H FY23 results, revealing a 32% cost increase.

A few days later, electric vehicle (EV) giant Telsa Inc (NASDAQ: TSLA) announced its next-generation EVs will use a permanent magnet motor without rare earths components.

Typically, EVs use a magnet with a rare earths alloy mix of neodymium, iron, and boron (NdFeB).

This prompted a sell-off on ASX rare earths stocks. The Lynas share price dropped by 6.8% on the news.

Many experts said this was an overreaction.

Among them were specialist critical minerals research and advisory firm Adamas Intelligence.

Adamas said its research showed Tesla only accounts for 2% to 3% of global NdFeB demand.

Broker tips 25% upside from here

According to reporting in The Australian, Citi has commenced coverage on Lynas with a buy rating.

The broker has a 12-month share price target of $8.20 on Lynas.

This implies a 25.5% potential upside for investors who buy Lynas shares today.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Materials Shares

Why this $2.3 billion ASX 200 mining stock just crashed 9%

Investors have been quick to hit the sell button today. But why?

Read more »

two young mining apprentices wearing their high visibility gear and hard hats stand together smiling.
Materials Shares

Are BHP shares dirt cheap?

A leading broker has given its verdict on this mining giant following its update.

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Materials Shares

Big returns! Broker tips Liontown shares to double in value

This lithium miner could be heading higher from here according to one broker.

Read more »

Two young African mine workers wearing protective wear are discussing coal quality while on site at a coal mine.
Materials Shares

Why this expert thinks lithium could be a big deal for Rio Tinto shares

Let’s dig into what lithium could mean for Rio Tinto.

Read more »

Materials Shares

Novonix share price crashes 10% on shock news

Why are investors hitting the sell button on Tuesday? Let's find out what is happening.

Read more »

Lion holding and screaming into a yellow loudspeaker on a blue background, symbolising an announcement from Liontown.
Materials Shares

Why are Liontown shares roaring 14% higher today?

Investors are fighting to get hold of this lithium miner's shares. But why?

Read more »

Business people standing at a mine site smiling.
Materials Shares

South32 shares higher on solid half year update

The market has responded positively to the miner's update. Let's dig deeper into it.

Read more »

a woman smiles as she checks her phone in one hand with a takeaway coffee in the other as she charges her electric vehicle at a charging station.
Materials Shares

Guess which ASX lithium stock is jumping 29% on $1.6b funding boost

Big news is getting investors excited on Monday. Let's dig deeper into what is happening.

Read more »