USA Rare Earth stock is a buy, this analyst says

Roth Capital analyst Suji Desilva reiterated a “Buy” rating and $20 price target on USA Rare Earth (USA Rare Earth Stock Quote, Chart, News, Analysts, Financials NASDAQ:USAR), saying in a June 16 note that a new agreement with industrial customer Moog adds confidence the company will begin magnet sales in early 2026.

USA Rare Earth is building a U.S.-based rare earth magnet supply chain backed by mining rights to the Round Top deposit in Texas. It’s constructing a 300,000-square-foot magnet plant in Stillwater, Oklahoma, and focuses on minerals used in sectors like defence, automotive, and electronics.

Desilva said the new agreement with Moog likely reflects a broad magnet opportunity. Moog is USA Rare Earth’s third announced customer, expanding early demand visibility.

“Specifically, USAR magnets are going to ramp in volume with MOG’s electric motion solutions group,” Desilva said. “We are encouraged by USAR’s newer exposure to emerging growth areas such as data centers and regard the motors needed for liquid cooling pumps as a key AI infrastructure growth requirement for higher-density AI GPU clusters. A key requirement in high-density AI data centers is tolerance to thermal levels, a strength of USAR’s REE magnets in our view. Given the breadth of MOG’s business across defence, military/commercial aircraft, and industrial, where domestic sourcing is a significant consideration going forward, we believe USAR has additional design win opportunities. We believe that many additional large industrial data center cooling customers represent high probability opportunities for USAR.”

Desilva expects USA Rare Earth to post an Adjusted EBITDA loss of $0.60-million on no revenue in fiscal 2025. He forecasts results to improve in fiscal 2026, with an Adjusted EBITDA loss narrowing to $0.54-million on revenue of $40-million.

The MOU is the latest in a string of customer agreements announced since USA Rare Earth commissioned its Innovations Lab in Stillwater on March 31. The lab mirrors the company’s planned commercial facility and allows it to prototype magnets and begin customer qualification processes ahead of full production in 2026.

“We continue our mission to bring the rare earth supply chain back to the broader technology market here in the U.S.,” Joshua Ballard, CEO of USA Rare Earth, said in a release announcing the MOU. “We are excited to support Moog in bringing their magnets back home to America, a leader in so many critical industries in need of neo-magnetic applications. We look forward to building a lasting partnership for many years to come.”

Under the agreement, USA Rare Earth will design and test Neodymium magnets for Moog’s CoreMotion technology, used to improve energy efficiency in data centers worldwide.

“Moog’s Electric Motion Solutions business is proud to partner with USA Rare Earth as they build a secure domestic supply chain for rare earth magnets,” said Gwen Handy, Sector Supply Chain Manager at Moog. “With the rapid growth of AI, demand for high-performance data center cooling solutions is accelerating and reliable access to powerful, heat-resistant rare earth magnets is essential to helping our industry-leading customers deliver on their AI infrastructure commitments.”

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