Lynas Rare Earths Ltd (ASX: LYC) shares have shot up from their August lows, rallying from $5.85 to $7.90 at market close on Wednesday.
Shares in the rare earths producer are a shade off their 52-week highs of $8.02 on the last day of September. They have been tracking sideways for about a month now.
With the year's end fast approaching, the question we have now is whether these gains can and will continue. So, where should investors place Lynas shares in their 2025 portfolio—buy, sell, or hold? Let's see what the experts think.
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The Latest on Lynas shares
Lynas shares have extended in recent months along with demand for neodymium and praseodymium (NdPr).
Neodymium itself currently trades at CNY 527,500, more than 17% higher than levels seen toward the end of July.
Even still, prices for the metal are down 18% from this time last year.
Investors saw the flow-through of these lower prices in Lynas' quarterly update, posted on October 30.
The rare earths player put up quarterly revenue of $120 million, down 6% year over year due to the relatively softer rare earths market.
Offsetting this was the company's production numbers, with total rare earths oxide (REO) output at 2,722 tonnes, up from the previous quarter's 2,188 tonnes.
NdPr production also grew by 10% year over year.
Despite solid production figures, Lynas shares haven't fully escaped the impact of rare earths price softness.
Rare earths market prices are still down from this time last year, even with their recent gains. For Lynas to continue its upsides into 2025, NdPr will need to strengthen as well.
So, is it a buy, hold, or sell?
It's helpful to first establish that the median analyst estimate, or the consensus, rates Lynas as a hold, according to CommSec.
This is made up from six buys, six holds, and three sell ratings on Lynas shares.
Various brokers have differing expectations for rare earths pricing and Lynas' valuation. The company's fundamentals, in other words.
Macquarie is the most recent broker to rate the stock a sell. According to my colleague James, the broker lowered its rating with a $7.50 price target in a note today.
Bell Potter also downgraded Lynas to a hold rating with a price target of $8 apiece, citing near-term price softness for NdPr and potential production bottlenecks.
The broker acknowledges Lynas' asset base as a strength but sees the shares as fairly valued at current levels.
Similarly, Goldman Sachs shifted to a neutral stance on Lynas, suggesting the stock is trading near its fair value in an October note.
Analysts factored in an NdPr price forecast of US$75/kg in the longer term. This compares to the US$48/kg Lynas realised on sales in the previous quarter.
The firm reduced its price target to $7.30 with the downgrade.
While we remain positive on LYC's asset base and production growth, we now see LYC as relatively fully valued, and combined with our view that the rare earth market appears balanced over the medium term, we downgrade LYC to Neutral (from Buy).
Foolish takeaway
While Lynas shares have risen over the past year, hitting 52-week highs, the short-term outlook largely depends on rare earths pricing.
On that note, bokers are split on what's next for the company. The general view is that it's a hold for now.
In the last 12 months, the stock is up 13%.
