Editors' Note: This article covers one or more micro-cap stocks. Please be aware of the risks associated with these stocks.
As the year is winding down, we are providing our last monthly update on silver analyst price targets for primary silver mining companies in 2013. As in previous installments, we are summarizing our observations of analysts' price targets as published on Yahoo.com. In the present December edition, comparisons will be made to the data presented roughly a month ago in our November summary.
As always, we would like to take note of the fact that most companies considered for this article are covered by more analysts than reported in our data since this article only considers analyst reports available through Yahoo.com.
As in previous reports, we included the following silver miners in alphabetical order: Coeur Mining (NYSE:CDE), Endeavour Silver (NYSE:EXK), First Majestic Silver (NYSE:AG), Great Panther Silver (NYSEMKT:GPL), Fortuna Silver Mines (NYSE:FSM), Hecla Mining (NYSE:HL), Pan American Silver (NASDAQ:PAAS), Silver Standard (NASDAQ:SSRI), Silvercorp Metals (NYSE:SVM) and SilverCrest Mines (NYSEMKT:SVLC). And we would like to welcome Bear Creek Mining (OTCPK:BCEKF) as a new entry in our watch list.
The table below summarizes our data. The first three columns list the company names, ticker symbols and share prices at the time of writing. Price targets (low, median and high) are listed in the following three columns. These targets are followed by a column giving the number of analysts providing data to Yahoo.com and the mean recommendations given by these analysts ranging from 1.0 (strong buy) to 5.0 (sell). This concludes the data sourced directly from Yahoo.com.
The following columns are colored in light green and contain data derived from our source data. These data points are given in percentages related to the share price at the time of writing. The column titled "median-price" gives the differences between the share price and the median target prices. The column titled "high-low" gives the differences between the high and the low targets. The last four columns titled "target change" document the changes in price targets since the November report with the last column giving the average change over the low, median and high price targets.
Shares trading significantly below the median price target can be viewed as having a greater potential than shares trading close to this target and values in column "median-price" can give some indication on the potential of a stock. A diagram visualizing this difference between the medium price target and the current share price is given below. We would like to caution that this way of thinking does not apply for companies that have had significant events moving the share price in recent times since analysts will take their time to update their data accordingly.
According to analysts, Bear Creek Mining has the greatest potential of the companies included in this review. Shares of this company are trading more than 100% below the median price target. This company is still an explorer, so the risk profile differs from producing companies in our watch list.
Silvercorp Metals, Silvercrest Mines, Fortuna Mines and First Majestic Silver all trade more than 60% below the median price target. At the other end of the range, we note PanAmerican Silver currently trading with little upside as far as analysts are concerned.
The difference between the high and the low targets represents a measure for the divergence in analyst opinions. Column "high-low" documents this difference and the diagram below visualizes it. This divergence in analyst targets is still greatest for Coeur Mining and Silver Standard. Analysts are 100% in agreement as far as price targets for Great Panther Silver are concerned. Very little divergence in analyst opinions is also observed for Silvercorp Metals.
Column "target change average" lists the average change in price targets during the past month and the diagram below illustrates them.
First Majestic Silver seems to have fallen out of analysts' favor and suffered a major price target cut. Target changes for the other companies were modest in comparison. On average, price targets were cut by -4.3% during the past month.
The final diagram illustrates column "Recommendation" from the table above. The little red bars in this diagram indicate changes in analysts' recommendation from last month.
Fortuna Silver has joined First Majestic Silver in pole position in this ranking and PanAmerican Silver is apparently the least-liked silver miner by analysts. The only change in recommendation observed since last month is a slight improvement for Silver Standard.
2013 has been a difficult year for the silver mining sector. The silver price has fallen to multi-year lows and has played havoc with margins. And adding insult to injury, the Mexican tax reform is coming at probably the worst possible time and will make life for most companies in our watch list even more difficult going into 2014.
Much effort has gone into keeping these companies afloat and making them profitable under volatile market conditions. Although the current outlook is for more of the same, one can at least put a wish for higher and more stable silver prices in 2014 on Santa's list.
Disclosure: I am long AG, EXK, SVLC, HL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.