Goldman Sachs Downgrades Pan Am Silver (PAAS) to Sell on Weak Silver Prices

February 25, 2014 6:49 AM EST
Get Alerts PAAS Hot Sheet
Price: $18.39 +0.66%

Rating Summary:
    4 Buy, 10 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Goldman Sachs downgraded Pan Am Silver (NASDAQ: PAAS) from Neutral to Sell with a price target of C$10.00, suggesting 41% downside.

The downgrade comes as the firm is lowering their silver price forecast, given their more bearish view, driven by a lack of supply-side response. Specially, the firm forecasts silver at $21.8/oz from 2015 onwards. " Unlike gold, we anticipate the supply response to a decrease in silver prices will likely be limited; more than 70% of mine production comes as a by-product of mining for other minerals, so supply is dependent on demand for other metals such as lead/zinc, copper and gold," Goldman's analysts said.

While Pan Am Silver has a strong balance sheet, the revised silver price deck suggests the company's ability to generate free cash flow is limited, analyst Andrew Quail said.

For an analyst ratings summary and ratings history on Pan Am Silver click here. For more ratings news on Pan Am Silver click here.

Shares of Pan Am Silver closed at $15.22 yesterday.

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