Hecla Mining Company (HL – Research Report), the Basic Materials sector company, was revisited by a Wall Street analyst today. Analyst Heiko Ihle from H.C. Wainwright remains neutral on the stock and has a $8.75 price target.
Heiko Ihle’s Buy rating on the Hecla Mining Company’s stock (ticker symbol: HL) is predicated on several factors. First and foremost, the company reported an impressive $181.9M in sales for the 3rd quarter of 2023, which compared favorably with the revenue of $146.3M in the same period in 2022. This significant increase in sales is largely attributed to the higher realized prices for silver, lead, and zinc, and an increase in gold sales volumes, even though this was partially offset by lower gold prices and reduced sales volumes for silver, lead, and zinc. Furthermore, the company posted a gross profit of $33.5M, a remarkable improvement from $8.4M in 3Q22, despite the ongoing temporary suspension of operations at Lucky Friday.
Ihle also considered Hecla’s proactive approach towards restarting operations at Lucky Friday, with a total capital expenditure of between $8 – $12M expected for the mitigation efforts. He took note of the company’s increased capital guidance for Lucky Friday, indicating ongoing mitigation plans. Moreover, the company’s confident forecast that the suspension of production at Lucky Friday will not significantly impact its 2024 production results, as well as its possession of property and business interruption insurance, were additional factors that contributed to Ihle’s Buy rating. Lastly, the rating took into account the slightly lowered price target (PT) of $8.75, down from $9.00, due to the incorporation of Hecla’s 3Q23 results into the valuation model, resulting in a higher debt balance that slightly reduced the net asset value per share. The valuation model used was based on a discounted cash flow of Hecla’s operating assets, using a 7.0% discount rate and a 1.5x net asset value multiple.
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Hecla Mining Company (HL) Company Description:
Hecla Mining Co. operates as a silver and gold production company. It produces lead, zinc and bulk concentrates for custom smelters and brokers; and develops unrefined precipitate and bullion bars for precious metals traders. It operates through the following business segments: Greens Creek, Lucky Friday, Casa Berardi, Nevada Operations and San Sebastian. The Greens Creek segment is located on Admiralty Island, Junea, Alaska. The Lucky Friday segment is located in northern Idaho. The Casa Berardi segment is located in the Abitibi region of northwestern Quebec, Canada and is operated by Aurizon. The San Sebastian segment is located in the state of Durango, Mexico and contains underground mines. The company was founded by Amasa B. Campbell, Patsy Clark and John Finch on October 14, 1891 and is headquartered in Coeur d’Alene, ID.
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