Lynas Rare Earths' (ASX:LYC) medium and long-term outlook remains constructive, despite ongoing market softness, a December 2024 quarter production miss, and near-term uncertainties regarding feed impurities at Lynas' Kalgoorlie facility in Western Australia, according to a Monday note from Euroz Hartleys.
The positive outlook is driven by the company's growth strategy, particularly its ramp-up to about 10.5 kilotonnes per annum of neodymium and praseodymium production by fiscal 2026, Euroz Hartleys said.
Last week, the company reported 2,617 tonnes of rare earth oxides in the fiscal second quarter ended Dec. 31, 2024, from 2,722 tonnes in fiscal first quarter.
Euroz Hartleys noted that the results were a large miss on its prior guidance as the company's Malaysian processing facility reached its limit in late November 2024 but expects sales to catch up in the second half of the fiscal year.
The firm added that market conditions remain weak, with low prices to persist through the March 2025 quarter due to lower demand in China and the extended Chinese new-year break.
Chinese rare earth mining and refining quotas expected in the first half of fiscal 2025 are seen as a key catalyst for the sector, Euroz Hartleys added.
Euroz Hartleys maintained the company's buy rating but cut its price target to AU$8 from AU$8.50.
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