Analysts Lower Pan American Silver and Agnico-Eagle Mines' Price Targets

Both Pan American Silver Corp. (PAAS) and Agnico-Eagle Mines Ltd. (AEM) got estimate and price target reductions from Blackmont Capital analyst Richard Gray due to lower expectations for zinc prices.

Blackmont recently cut its zinc forecast by $0.30 to $1.20 per pound for 2011, by $0.25 to $1.00 for 2012, while its 2013 projection remains unchanged at $0.74.

As a result, Mr. Gray’s earnings per share [EPS] and cash flow per share (CFPS) estimates for Pan American decline by 7% in 2008 and 11% in 2009. His net asset value (NAV) dips by 6% to C$25.50 from C$27. Zinc production from Pan American’s mine represent roughly 25% of his near-term cash flow estimates and 20% of his NAV.

He continues to rate the stock a “buy,” but his price target falls by C$4 to C$40.

The analyst’s EPS and CFPS estimates for Agnico Eagle decline roughly 11% and 7%, respectively, for 2008 and 2009. His NAV forecast falls C$0.75 to C$31, while zinc production from its LaRonde project represents roughly 35% of his estimated cash flow in 2008 and 23% in 2009.

Mr. Gray shaved C$2 of his Agnico price target to C$60. It continues to be rated a “buy.”