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Downgrade: Here's How Analysts See MP Materials Corp. (NYSE:MP) Performing In The Near Term

One thing we could say about the analysts on MP Materials Corp. (NYSE:MP) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the consensus from seven analysts covering MP Materials is for revenues of US$224m in 2024, implying a definite 12% decline in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 136% to US$0.32. Prior to this update, the analysts had been forecasting revenues of US$395m and earnings per share (EPS) of US$0.42 in 2024. Indeed, we can see that the analysts are a lot more bearish about MP Materials' prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for MP Materials

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earnings-and-revenue-growth

The consensus price target fell 5.5% to US$26.73, with the weaker earnings outlook clearly leading analyst valuation estimates.

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One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 12% by the end of 2024. This indicates a significant reduction from annual growth of 33% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.0% per year. It's pretty clear that MP Materials' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for MP Materials. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of MP Materials.

There might be good reason for analyst bearishness towards MP Materials, like its declining profit margins. Learn more, and discover the 1 other risk we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.