Neo Performance Materials: Narva Plant Spurs Buy Case

Ventum Capital Markets analyst Marvin Wolff raised his 12-month target for Neo Performance Materials to C$24.00 from C$20.50 and maintained a "Buy" rating, calling the Narva plant opening a watershed moment for Western rare-earth supply chains.

Toronto-based Neo supplies NdFeB permanent magnets for automotive EV traction motors and rare-earth materials for catalytic converters, operating an integrated mines-to-magnet chain. The newly opened Narva sintered magnet plant in Estonia is the first of its kind in the West, positioning Neo as the only Western-based producer of sintered permanent magnets and enabling OEMs to source traction motors with largely Western components.

Global demand for EVs and wind turbines is expanding rapidly; wind is forecast to grow at about a 10% CAGR and EV production is expected to reach roughly 20 million units in 2025. Wolff says this accelerates the shift away from Chinese supply chains toward Western self-reliance from mine through manufacturing.

Neo currently produces ~13,000 tonnes per year (including 6,000–7,000 tonnes of magnets) and Wolff envisions traction motor magnets potentially growing to ~20,000 tpa. The company has roughly $80 million cash and $50 million in unused credit lines. Current EBITDA runs about $60–75 million, with potential to reach $125–150 million as traction magnet production scales.

Wolff projects Adjusted EBITDA of $66.1 million on $460.6 million revenue for fiscal 2025 and $73.3 million on $498.1 million for 2026. He models Narva contributing $45 million EBITDA by 2029 and applies an 8× EV/EBITDA multiple and 10% discount to justify the C$24 target, noting Neo’s appeal to strategic buyers.