Why the Majority of Analysts Recommend a ‘Hold’ for Pan American Silver

Anuradha Garg - Author

Jun. 27 2016, Updated 2:05 p.m. ET

The majority say “hold” for Pan American

75% of analysts have a “hold” rating on Pan American Silver (PAAS), 17% have “buy” ratings, and only 8% have “sell” ratings. At the start of the year, 33% of analysts had given PAAS a “sell” rating. As we’ve seen earlier in the series, other producers like Hecla Mining (HL) and Silver Standard Resources (SSRI) also have “hold” as their consensus rating. Due to strength in precious metal prices (DBP) and the fact that share prices of some of these miners have surpassed expectations, analysts recommend a “hold” for the time being and are waiting for the next catalyst to decide their next course of action.

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Target price doubled

PAAS’s target price is $15.6, which implies a potential upside of 5%. Its target price has almost doubled since the start of 2016 as is the case with other precious metal miners as well.

Analysts are reiterating ratings

RBC Capital reiterated its “sector perform” rating on PAAS on June 13. The broker increased its target price for the stock from $12 to $15.

FBR Capital Markets also reiterated its “market perform” rating on the stock. It increased its target price from to $12 to $16.

After PAAS’s analyst day, Credit Suisse (CS) commented on the stock. It said that PAAS’s La Colorada expansion capex is tracking at 77% of the budget. The broker thinks that the expansion and the start-up of the new sulfide plant are low-risk. It added, “We see the opportunity for capex rationalization as well as an opportunity for PAA to rebase its unit cost estimates vs. the 2013/14 PEAs released for the expansion projects.” The company also believes that PAAS remains a transformational story due to lower costs.


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