Why Most Analysts Are on the Sidelines about SSRI



SSRI ratings

The majority of analysts have a “hold” rating on Silver Standard Resources (SSRI). While 86% of analysts have a “hold” rating on the stock, only 14% of analysts rate it a “buy.” It doesn’t have any “sell” ratings. SSRI’s target price is $9.8, which implies a potential downside of 14%. While SSRI’s ratings have remained more or less the same, its target price has seen an upward revision of 44% since the start of the year. This, however, shouldn’t come as a surprise given the recent strength in precious metal prices (DBP).

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Rating changes

Silver Standard Resources (SSRI) was downgraded by Scotia Capital on June 15, 2016. It was downgraded to “sector perform” from “outperform.” Deutsche Bank (DB), on the other hand, reiterated its “hold” rating while increasing its target price from $8 to $11.5 on June 9.

BMO Capital Markets also reiterated its “hold” rating on Silver Standard with a target price of $10 on May 31.

Driver for estimates

The estimates for SSRI year-to-date have been driven by better-than-expected 1Q16 earnings, the acquisition of Claude Resources, and cost improvement at SSRI’s Pirquitas mine. However, there doesn’t seem to be a near-term catalyst for the stock, which is probably the reason why the majority of analysts have “hold” ratings for the stock as they await the next catalyst. Higher silver prices, on the other hand, still remain a tailwind and should positively impact primary silver producers such as Hecla Mining (HL), Pan American Silver (PAAS), and Majestic Silver (AG).

Investing in leveraged funds such as the Direxion Daily Gold Miners ETF (NUGT) and the ProShares Ultra Silver ETF (AGQ) could also be an option for investors with a positive outlook on precious metal prices.


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