A-Mark Precious Metals: A Hold Rating Amidst Modest Recovery and Overvaluation Concerns

B.Riley Financial analyst Lucas Pipes downgraded the rating on A-Mark Precious Metals (AMRK – Research Report) to a Hold today, setting a price target of $33.00.

Lucas Pipes has given his Hold rating due to a combination of factors including market conditions and stock performance. Despite softer demand over the last two quarters, A-Mark Precious Metals has maintained a trading level near the top of its two-year range. This resilience in the face of challenging markets has led to an expanded trailing 12-month P/E multiple. While there has been a recent improvement in metal premiums, which suggests moderately better results for the current quarter, the stock appears to be overestimating the pace of recovery. The modest quarter-to-date increase in silver margins and a decline in gold margins have led to a downward revision of expected adjusted EBITDA and EPS for the fiscal year.
Furthermore, A-Mark Precious Metals has shown to be a stable hedge during financial and geopolitical instabilities, notably performing well amid recent events like the SVB failure and U.S. debt ceiling discussions. Despite this strength, Pipes suggests the stock’s current valuation is reflective of an optimistically rapid recovery and return to previous profit margins, which may not align with the more modest actual improvements in metal premiums observed. With the market already pricing in a strong recovery, Pipes is advocating for a more cautious approach, recommending a Neutral stance while seeking a better entry point or signs of a faster improvement in metal premiums.

In another report released on May 8, Northland Securities also downgraded the stock to a Hold with a $40.00 price target.

Based on the recent corporate insider activity of 37 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of AMRK in relation to earlier this year.

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A-Mark Precious Metals (AMRK) Company Description:

A-Mark Precious Metals, Inc. engages in the trading of precious metals. It operates through the following segments: Wholesale Trading and Ancillary Services; Secured Lending; and Direct Sales. The Wholesale Trading and Ancillary Services segment offers gold, silver, platinum, and palladium in the form of bars, plates, powder, wafers, grain, ingots, and coins. The Secured Lending segment serves coin and precious metal dealers, investors, and collectors. The Direct Sales segment sells precious metals to the investor community. The company was founded by Steven C. Markoff on April 9, 1965 and is headquartered in El Segundo, CA.