CORRECTION: Molycorp Continues to Weigh on Rare Earth Stocks

Correction: The grammar in the original may have been misinterpretted as Molycorp lowering their EPS numbers. However, as a point of clarity, the financials mentioned below are from Mr. Gambardella’s report.

Molycorp (NYSE:MCP), a rare earth miner, has been reeling under the weight of a downgrade from a perma bull on the stock – Mike Gambardella of JP Morgan. His price target has been slashed from $105 to $66 owing concerns to rare earth prices declining on forecasted world demand being cut.

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Gambardella also claims that the price decline has been triggered by Chinese speculators who had initially driven up the price. Gambardella has lowered his 2011 EPS from $2.44 to $1.75, 2012 from $6.10 to $3.15 and 2013 from $14.55 to $11.20. For this year, the firm cut Q311 from $0.86 to $0.70 and Q4 from $1.10 to $0.56. Gambardella has advocated a cautious stance on the stock, even though he is confident the Chinese government will likely take pro-active steps in favor of the industry.

Molycorp (NYSE:MCP) is trading at $40.55 today, down 2.22%. Shares are down 18% year to date. The stock’s trading range for the year is between $22.41 and $79.16.

Other rare earth stocks affected by the downgrade: Other Avalon Rare Metals (AMEX:AVL), Thompson Creek Metals Co. (NYSE:TC), General Moly Inc. (AMEX:GMO), and PolyMet Mining Corp. (AMEX:PLM).

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