On Friday, First Majestic Silver Corp (NYSE:AG) maintained its Buy rating and an $8.50 stock price target from H.C. Wainwright. The firm's analyst highlighted the silver producer's third-quarter production results, which were publicly released on Monday, October 17, 2024.
In the report, First Majestic announced it had produced 5.5 million silver equivalent ounces (SEOs) during the quarter, marking a 13% decrease year-over-year. The production included 2.0 million ounces of silver, down 20% from the previous year, and 41,761 ounces of gold, an 11% decline year-over-year.
Santa Elena's operations were noted for their continued strong performance, with consistent silver and gold grades and robust recovery rates. However, the San Dimas mine saw a drop in silver production due to lower grades and recoveries, despite an increase in gold output attributed to improvements in ore processing.
La Encantada also experienced a decrease in silver production, primarily due to reduced silver grades, although recovery rates at the site have shown significant improvements recently.
The analyst pointed out that First Majestic has resumed exploration activities at the Jerritt Canyon site, with a focus on drilling programs aimed at new and unexplored targets on recently permitted land. This initiative is part of the company's broader strategy to expand its production capabilities and resource base.
The reaffirmation of the Buy rating and the $8.50 price target by H.C. Wainwright reflects the firm's outlook on First Majestic's operational performance and its potential for future growth despite the recent production downturn. The analyst's comments suggest a positive view of First Majestic's efforts to improve production and explore new mining opportunities.
In other recent news, First Majestic Silver Corp. has announced a share repurchase program, authorizing the purchase of up to 10 million of its common shares, representing approximately 3.32% of its issued and outstanding shares.
The company has also reported a 7% increase in silver production and a 9% rise in gold output in the second quarter from its three operating mines in Mexico. Meanwhile, BMO Capital maintained its Market Perform rating on First Majestic's stock, with a steady price target of Cdn$10.00, following the disclosure of these second-quarter production figures.
In other significant developments, First Majestic has announced a definitive merger agreement with Gatos Silver, Inc., valued at approximately $970 million. The merger is expected to create an intermediate primary silver producer with a combined annual production of 30-32 million ounces of silver-equivalent. These are recent developments for First Majestic Silver Corp.
The company has revised its 2024 guidance, maintaining a consolidated production forecast of 21.4 to 22.6 million silver equivalent ounces. It is worth noting that First Majestic has also reported significant findings of silver and gold mineralization at its San Dimas Silver/Gold Mine in Mexico. The exploration program has yielded positive results, particularly within the central and western parts of the property.
InvestingPro Insights
To complement the analysis of First Majestic Silver Corp's recent production results and H.C. Wainwright's maintained Buy rating, let's delve into some key financial metrics and insights from InvestingPro.
According to InvestingPro data, First Majestic Silver Corp currently has a market capitalization of $1.91 billion. The company's revenue for the last twelve months as of Q2 2024 stood at $512.34 million, with a revenue growth of -16.23% over the same period. This decline in revenue aligns with the production decrease mentioned in the article.
InvestingPro Tips highlight that First Majestic operates with a moderate level of debt and its liquid assets exceed short-term obligations. These factors could provide the company with financial flexibility as it navigates the current production challenges and pursues exploration activities at Jerritt Canyon.
However, it is important to note that the company is not profitable over the last twelve months, with an operating income margin of -7.76%. This aligns with another InvestingPro Tip suggesting that analysts do not anticipate the company will be profitable this year.
Despite these challenges, the market seems to maintain a positive outlook on First Majestic, as evidenced by its 1-year price total return of 13%. The company's fair value, based on analyst targets, is estimated at $7.50, which is above its previous closing price of $6.33.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and metrics to further evaluate First Majestic's financial health and market position.
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