This Canadian uncommon earth inventory is a purchase, analyst says

Ventum Capital Markets analyst Marvin Wolff raised his 12-month goal value for Neo Efficiency Supplies (Neo Efficiency Supplies Inventory Quote, Chart, Information, Analysts, Financials TSX:NEO) to C$24.00 from C$20.50 and maintained his “Purchase” score in an Oct. 2 analysis observe, calling the opening of the corporate’s Narva plant a “watershed second” for Western uncommon earth provide chains.

Toronto-based Neo is a uncommon earths firm specializing in NdFeB everlasting magnets for automotive and EV traction motors, in addition to uncommon earth supplies for catalytic converters. It operates a completely built-in mines-to-magnet provide chain.

Neo just lately held the grand opening of its Narva traction motor magnet plant in Estonia, the primary such facility within the West. Wolff mentioned the transfer positions Neo as the one Western-based producer of uncommon earth sintered everlasting magnets, providing Western OEMs the power to construct traction motors with totally Western elements.

“We imagine the opening of the Narva sintered magnet plant is a watershed second for NEO because it strikes into sintered everlasting magnet manufacturing,” he mentioned.

International demand for EVs and wind generators continues to broaden, with wind rising at a ten% CAGR (from US$70-billion right now to US$150-billion by 2033) and world EV manufacturing anticipated to succeed in 20 million items in 2025, or 20% of whole car output. Wolff mentioned the shift away from Chinese language provide chains is accelerating, because the West seeks self-reliance on crucial applied sciences from mine to manufacturing.

Neo at the moment produces roughly 13,000 tonnes per 12 months of product, together with 6,000–7,000 tonnes of magnets, and Wolff mentioned traction motor magnets might in the end dominate its manufacturing profile at round 20,000 tpa. He famous that Neo’s stability sheet is powerful, with $80-million in money and $50-million in unused credit score traces, supporting its capital funding program.

NEO at the moment generates about $60–$75-million in EBITDA, and Wolff believes participation in EV traction motors might elevate that to $125–$150-million over time. He mentioned the corporate’s low U.S. tariff publicity and distinctive European operations present additional strategic benefits.

Wolff forecasts Neo will generate $66.1-million in Adjusted EBITDA on income of $460.6-million in fiscal 2025, bettering to $73.3-million on $498.1-million in fiscal 2026. These figures had been beforehand $59.8-million/$455.9-million for 2025 and $64.2-million/$451.5-million for 2026.

On valuation, Wolff shifted his horizon from 2027 to 2029, when he expects Narva to contribute $45-million in EBITDA and present operations $75-million, for a complete of $120-million. Making use of an 8× EV/EBITDA a number of and a ten% low cost fee, he arrived on the new C$24.00 goal.

“We’re of the view that this world chief in uncommon earths and magnetics ought to be interesting to strategic entities,” he mentioned.

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