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Could Hecla Mining Beat Analysts’ Estimates in 2017?

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Hecla Mining’s consensus rating

Among the silver miners (SIL) we’re focusing on in this series, Hecla Mining (HL) has the fewest “buy” ratings, earning them from just 20% of analysts. Of the analysts covering it, 10% rate it as “sell” while 70% rate it as “hold.” Hecla has not seen many rating changes in the last year. It has a target price of $6.28, which implies a potential upside of 16.7% based on its current market price.

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Hecla Mining’s revenue estimate

According to data compiled by Thomson Reuters, analysts expect Hecla Mining to achieve revenue of $140 million in 2Q17, a fall of 18.2% YoY (year-over-year). Analysts also expect its revenue to fall YoY in 2017, by 1.5%. Since Hecla’s 1Q17 results, analysts have downgraded their revenue expectations for 2017 by 6%, mostly because of Hecla’s suspension of production guidance due to a strike at its Lucky Friday mine in Idaho.

Earnings estimates

Hecla’s EBITDA (earnings before interest, tax, depreciation, and amortization) estimates also took a hit after its 1Q17 results. Analysts have downgraded their 2017 EBITDA estimates by 15% to $216.5 million in 2017, implying a YoY drop of 10%. Its margins are expected to narrow to 34% in 2017 from 37% in 2016.

A margin expansion is expected in 2018 and 2019, mainly due to Hecla Mining’s cost-cutting efforts and improved precious metal price (DBP) forecasts. However, Hecla Mining isn’t unique as far as cost-cutting efforts are concerned. Gold and silver miners IAMGOLD (IAG), AngloGold Ashanti (AU), and First Majestic Silver (AG) are also trying to reduce their costs.

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