Initiation with a $16 Price Target — What’s the Rationale?

Cantor Fitzgerald has initiated coverage on USA Rare Earth (Ticker: USAR) with an Overweight rating and a 12-month price target of $16. This move reflects growing investor interest in companies positioned to mitigate geopolitical risks in critical supply chains — especially rare earth elements essential to high-tech and defense industries.

According to the firm, USAR stands to benefit from escalating tensions between the U.S. and China, which have brought the supply chain vulnerability for rare earths into sharp focus. These minerals are vital for semiconductors, renewable energy, robotics, and military-grade systems — all of which are core to 21st-century economic and security infrastructures.

The China Dependency: 90% of Heavy Rare Earths Flow Through Beijing

Currently, about 90% of global refining and magnet manufacturing related to heavy rare earth elements is based in China. This makes the United States heavily reliant on a foreign adversary for inputs critical to its defense and tech sectors. In recent trade negotiations, China’s dominance over this supply chain has served as a strategic leverage point, underscoring how fragile and exposed the U.S. industrial base has become.

Cantor Fitzgerald’s note emphasizes that USAR is uniquely positioned to challenge this dominance by establishing a fully-integrated, domestic supply chain — from mining to processing and magnet production — all within U.S. borders.

Why USAR Stands Out

USA Rare Earth aims to become a national champion in the effort to onshore rare earth production, eliminating the need for Chinese intermediaries. The company’s vision includes developing the entire supply infrastructure for “heavy” rare earths — those used in specialized magnets for electric vehicles, wind turbines, and aerospace applications.

Unlike companies that focus on raw material extraction alone, USAR is building capabilities across the full value chain, including processing and manufacturing — a rare and ambitious approach in the North American market. If successful, USAR could become a preferred partner for industries that require secure and transparent sourcing of critical materials.

Macro Trends as Tailwinds

The push for domestic resilience and reshoring is not just political rhetoric — it is increasingly backed by policy and funding. U.S. legislation in recent years, including the Inflation Reduction Act and CHIPS Act, has allocated billions of dollars to secure strategic supply chains, particularly those connected to defense and green technologies.

This macro context makes USAR a highly relevant player. The company’s business model aligns with federal priorities, and it could benefit from government contracts, grant funding, and favorable regulatory frameworks designed to reduce dependence on adversarial nations.

Risks Remain — But So Does the Asymmetrical Opportunity

While the thesis is compelling, the execution path is complex. Developing rare earth infrastructure requires not only capital but also environmental approvals, high-spec engineering, and the recruitment of a specialized workforce — all of which can delay or derail timelines.

Moreover, the market is beginning to attract more entrants, both domestic and global, each vying for a slice of the reshoring momentum. But USAR’s vertically integrated strategy may offer a first-mover advantage, especially if it can demonstrate scalability and compliance with federal standards.

If the company delivers, it could not only generate substantial revenue, but also reshape America’s rare earth ecosystem — from one of dependence to one of resilience.