Americas Gold and Silver (USAS – Research Report), the Basic Materials sector company, was revisited by a Wall Street analyst today. Analyst Heiko Ihle from H.C. Wainwright reiterated a Buy rating on the stock and has a $0.70 price target.
Heiko Ihle’s rating is based on a detailed evaluation of Americas Gold and Silver’s operational performance and strategic outlook. Despite the company’s 1Q24 results showing a year-over-year revenue decline and a notable increase in cash costs, Ihle remains optimistic about the company’s future. The increase in cash costs was primarily attributed to the declining zinc price and the strength of the Mexican peso. However, Ihle anticipates that the increased production at Galena will lead to reduced unit costs moving forward, which supports the Buy recommendation. Additionally, the recent equity raise, though dilutive, is incorporated into the new price target, and the valuation continues to be grounded in a discounted cash flow analysis of operations, considering unchanged discount rates for the company’s key projects.
Looking forward, Ihle identifies near-term catalysts that could enhance the company’s value, such as the finalization of negotiations with a metal trader that could lead to the production of higher-grade silver and copper concentrates by early 2025. Updates on mineral resources and reserves for the Galena and Cosalá projects are also anticipated. While the report mentions risks such as commodity price fluctuations, operating challenges, and technical uncertainties, the overall outlook for Americas Gold and Silver is positive, with the potential for the Relief Canyon mine to re-enter production and add long-term shareholder value. This potential, along with the strategic plans to increase production and the conservative valuation when compared to similar assets, underpins Ihle’s confidence in maintaining a Buy rating with a slightly adjusted price target.
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Americas Gold and Silver (USAS) Company Description:
Americas Silver Corp. engages in the acquisition, exploration, development and exploration of mineral resource properties. It focuses its operation in Mexico and the United States. The company was founded by Peter Jude Hawley on May 12, 1998 and is headquartered in Toronto, Canada.
