On Friday, H.C. Wainwright adjusted its outlook on American Silver Corp. (NYSE:USAS), lowering the price target to $0.70 from the previous $0.80, but retained a Buy rating on the stock. The revision follows the company's first-quarter financial results for 2024, which were disclosed earlier this week on Wednesday. American Silver reported a revenue of $19.5 million for the quarter, resulting in a net loss of $16.2 million, or a loss of $0.07 per share.
The financial performance signifies a downturn from the same quarter in the previous year, where the company saw a revenue of $22.1 million and a net loss of $10.5 million, or $0.05 per share. The year-over-year revenue decline of 12% was primarily due to decreased production of silver and lead at the Galena mine, coupled with a fall in zinc prices affecting the Cosalá operations. However, an increase in silver production at Cosalá did provide some offset to the reduced production and prices.
The company's cost of sales went up to $19.7 million, marking an 11% increase from the previous year, which contributed to the quarterly loss. Additionally, American Silver incurred a $1.1 million loss from the estimated fair value of a non-cash derivative liability related to the company's convertible debenture, which widened the net loss compared to the previous year.
The cut in the price target to $0.70 reflects the impact of recent capital raising efforts. The firm raised capital at a value below H.C. Wainwright's net asset value per share estimate, which has been factored into the revised valuation model. Despite the reduction in the target price, H.C. Wainwright maintains its Buy rating, indicating a continued positive outlook on American Silver Corp.'s stock.
InvestingPro Insights
As investors digest the revised outlook on American Silver Corp. (NYSE:USAS) by H.C. Wainwright, InvestingPro data and tips provide additional context for the company's financial health and stock performance. With a market capitalization of $81.1 million, the company is navigating through challenging times with a reported net loss and a decrease in year-over-year revenue. The InvestingPro data shows the company's revenue for the last twelve months as of Q4 2023 stands at $89.56 million, with a modest growth of 5.35%. Despite the revenue increase, the company's gross profit margin remains low at 11.9%, underlining the cost pressures American Silver faces.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year, providing a potential upside. However, the company is quickly burning through cash, and short-term obligations exceed its liquid assets, indicating liquidity concerns. Additionally, the stock is currently in overbought territory according to the Relative Strength Index (RSI), which could signal a future correction. It's also noteworthy that analysts do not expect the company to be profitable this year, and it has not been profitable over the last twelve months. Despite these challenges, the stock has seen a strong return over the last week, month, and three months, with a significant price uptick over the last six months.
For investors looking for a deeper dive into American Silver Corp., there are additional PRONEWS24 tips available on InvestingPro. With these insights, investors can make more informed decisions about their investment strategies, especially considering the company's current dynamics and market position.
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