Are Lynas shares a buy following Monday’s 6% dive?

Female miner in hard hat and safety vest on laptop with mining drill in background.

Female miner in hard hat and safety vest on laptop with mining drill in background.

The Lynas Rare Earths Ltd (ASX: LYC) share price is hurting as the ASX mining share goes through another dip.

It has been a volatile last 12 months for the business, with the share price going through a series of bumps. We’re currently sitting at a low point for one of those bumps.

With the volatility of updates, investment sentiment and resource prices, it’s understandable why the Lynas share price is moving about so much.

After the latest decrease, it’s worth considering whether the ASX mining share is a buy or not.

Expert views on the Lynas share price

According to reporting by The Australian, some of the leading brokers in Australia have had their say on whether the rare earth miner is a buy or not.

JPMorgan has decided to increase its rating on the business to neutral. JPMorgan’s price target on the business is $8.60 – a price target implies where the broker believes the share price could be trading in 12 months from the date that the target is issued.

This means that JPMorgan is suggesting that the Lynas share price could increase by around 6%.

The broker UBS is less positive on Lynas than it used to be, with a cut of the rating to neutral. The price target was reduced, to $9. So, it still sees a decent upside for the Lynas share price from here – a possible rise of 11%.

Is this a good time to buy?

Unless my crystal ball starts working, it’s hard to know what the Lynas share price is going to do next.

Lynas seems to be doing what it needs to do to achieve growth in its operations, even if it can’t control the price of rare earths.

In the FY23 half-year result, it reported that revenue rose 17.5% to $370 million, but net profit after tax (NPAT) fell 4.3% to $150.1 million. A key part of the decline came about after a rise of almost 32% of cost of sales.

Lynas suffered from “significant” production challenges due to water supply issues in the first quarter and the start of the second quarter as well as “rapid increases in costs, particularly for chemical inputs.”

The ASX rare earth miner said that construction activity on the Kalgoorlie rare earths processing facility accelerated, with recruitment of the operational leadership team now complete.

Lynas said the Kalgoorlie facility is important for business continuity as well as growth. The company said:

Its importance is highlighted following the announcement of the renewal of the Lynas Malaysia operating licence with conditions prohibiting the import and processing of lanthanide concentrate from 1 July 2023. If not removed, these conditions would require the closure of the Malaysian cracking and leaching plant. Due to the inherent unpredictability of commissioning, Lynas continues to plan for several potential ramp up scenarios.

The company also said that the Mt Weld expansion project is “progressing well”, while it continues to make progress on the development of a US rare earths separation facility.

If I were looking to buy a piece of the miner, I think this is a good Lynas share price to do it at. I like its plans to grow, and it seems to be a strategically important business for the US to diversify the country’s source of supply of rare earths.

The post Are Lynas shares a buy following Monday’s 6% dive? appeared first on The Motley Fool Australia.

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More reading

Motley Fool contributor Tristan Harrison 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.

from The Motley Fool Australia

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