The research house acknowledged what it called a “structural deficiency” compared with some sector peers, pointing to the absence of government-guaranteed price floors and long-term offtake agreements in USAR’s current portfolio. Nonetheless, Canaccord noted management’s view that the business model remains sustainable without those protections and argued that federal support mitigates near-term funding risk. The firm concluded that USAR is positioned to become a central element of the domestic rare-earth ecosystem.
Benchmark moves target to $45 on expanded capacity plan
Also on January 27, Benchmark analyst Subash Chandra raised his price target for USA Rare Earth to $45 from $15, maintaining a Buy rating. Benchmark’s revision follows the company’s disclosure that it has now secured roughly 85 percent of the $4.1 billion required to achieve full vertical integration, including $1.9 billion in government financing. The new valuation assumes the firm doubles its planned magnet-production capacity to 10,000 metric tons per year, while capturing revenue from three distinct activities: upstream mining at the Round Top deposit in Texas, midstream metal processing, and third-party concentrate tolling.
Benchmark’s note emphasized the scale of committed public capital, describing the government contribution as “surprisingly large.” With the majority of funding in place, the research team expects USAR to accelerate construction timelines and de-risk both capital intensity and operating costs.
Federal letter of intent under the CHIPS Program
The $1.6 billion letter of intent originates from the CHIPS Program Office of the U.S. Department of Commerce. While final terms have not been disclosed, the non-binding commitment signals Washington’s intent to support domestic production of strategic materials regarded as essential for advanced manufacturing. USA Rare Earth reported that it will work with Commerce officials to finalize the scope, milestones, and compliance requirements tied to the potential funding.
In parallel, the collaboration agreement announced with the Department of Energy is designed to advance research, pilot testing, and commercialization related to rare-earth magnet production. Specific financial terms of the DOE partnership were not released, but the company indicated that the two federal initiatives will operate in tandem to accelerate development across the mining, refining, and magnet-making segments of its supply chain.
Company outlines three-stage integration strategy
USA Rare Earth’s business plan centers on controlling each phase of rare-earth value creation within U.S. borders. The upstream element is anchored by its Round Top project, which hosts resources that include neodymium, dysprosium, terbium, gallium, beryllium, lithium, and other critical materials. Midstream operations are slated to encompass metal separation and alloy production, while downstream activities focus on producing finished magnets for use in electric vehicles, wind turbines, and defense systems.
Management previously estimated total capital needs at $4.1 billion to reach commercial output across all three stages. With the new federal commitments and additional private funding, approximately 85 percent of that requirement is now in hand, according to recent company statements highlighted by Benchmark. The updated financing mix is expected to lower execution risk and shorten the timeline to positive free cash flow.
Analyst perspectives converge on domestic supply-chain importance
Although Canaccord and Benchmark differ in their valuation methodologies, both firms emphasize the strategic relevance of establishing a U.S. source for rare-earth magnets. Canaccord’s revised model factors in accelerated revenue from earlier production start-ups, whereas Benchmark applies a higher capacity forecast and credits multiple revenue channels. Both analysts cite federal commitments as catalysts that reduce funding uncertainty and underpin their Buy recommendations.
Neither note indicates that USA Rare Earth has yet secured long-term offtake contracts, and both acknowledge that pricing volatility remains a sector risk. Nevertheless, the analysts argue that government support, plus the company’s integrated approach, partially offsets those concerns.
Next steps and anticipated milestones
USA Rare Earth plans to negotiate definitive agreements with the Department of Commerce and the Department of Energy over the coming months. Final investment decisions for processing facilities and magnet plants are expected after permitting and engineering reviews are completed. Both Canaccord and Benchmark project first revenue from initial operations in the next several years, contingent on regulatory approvals and construction progress.
For investors, the latest analyst actions highlight growing institutional confidence in USA Rare Earth’s ability to transition from project development to commercial production, bolstered by substantial federal involvement. Whether the company can achieve its stated timelines and capacity targets will depend on executing complex engineering, securing offtake arrangements, and navigating commodity price dynamics, but the additional capital commitments mark a pivotal step toward realizing a fully domestic rare-earth supply chain.
Crédito da imagem: Insider Monkey
