When the government promises to buy your product at a minimum price, you've got a pretty sweet deal. That's the situation MP Materials Corp (MP) finds itself in, and JPMorgan Chase analyst Bill Peterson thinks it's worth paying attention to.

A $110 Floor With Upside Still on the Table

Peterson maintained his Overweight rating and bumped his price target to $76—about 33% above where shares recently traded. The centerpiece of his thesis? A Department of Defense agreement that locks in a $110/kg price floor for NdPr (that's Neodymium-Praseodymium, a key rare earth product) starting October 1.

Here's the clever part: if rare earth prices stay above $110, MP keeps collecting the higher market rate. The price floor only matters if things fall apart. Until the company's 10X magnet facility hits full capacity later this decade, MP gets the best of both worlds—protection on the downside, exposure on the upside.

Peterson calls it asymmetric risk-reward, and with national security concerns around rare earths intensifying, he thinks that floor isn't going anywhere.

Magnets and Midstream Production Take Center Stage

The upcoming fourth-quarter earnings might look quiet on the surface, but Peterson says the real focus is on midstream NdPr production confidence and the magnet ramp scheduled for the second half of 2026.

He expects EBITDA to swing positive again in Q4 as DoD top-off payments start flowing, though free cash flow will likely stay under pressure from capital spending and inventory builds. Looking further out, Peterson models an EBITDA floor around $650 million once 10X reaches full scale.

Why This Matters

MP shares have bounced back this year alongside climbing NdPr prices, but volatility remains high thanks to trade headlines and retail trading activity. Peterson's argument cuts through the noise: rare earth security isn't a cyclical trend—it's a structural shift.

With a government-backed price floor and magnet production scaling up, MP isn't just digging up rocks. It's building something closer to strategic infrastructure.