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Roth Capital ups target for Silvercorp Metals after fiscal first quarter production beats its estimates

Roth hiked its price target to US$6.50 from US$6.25 previously, with Silvercorp shares currently changing hands at US$6.15 in New York

Silvercorp Metals Inc -
The broker attributes the production beat to better than anticipated recovery rates

Roth Capital Partners has raised its target price for Silvercorp Metals Inc (NSYEAMERICAN:SVM) (TSX:SVM) and reiterated a 'buy' rating on the stock after the miner's fiscal first-quarter production beat the broker's estimates.

In the three months to end June, the China-focused miner saw output of 1.8 million ounces of silver, 20.1 million pounds of lead, and 7.5 million pounds of zinc.

READ: Silvercorp Metals on track to meet fiscal 2021 output guidance as it reports solid first quarter numbers

That was better "across the board" than Roth's estimates of 1.7 million ounces of silver, 18.3 million pounds of lead, and 7.1 million pounds of zinc," said analyst Joe Reagor in a note.

"We attribute the production beat to better than anticipated recovery rates," he added.

The mining analyst also noted that while metals prices have increased in recent months, many gold and silver producers have seen balance sheets come under pressure due to production curtailments due to the coronavirus pandemic.

But he said Silvercorp had a "strong balance sheet that should be further improved when it reports fiscal Q1 2021 financial results, in our view".

"We believe Silvercorp's strong balance sheet should command a premium valuation in the market and as such, we have added a $50 million premium to our DCF valuation," he added.

Roth hiked its price target to US$6.50 from US$6.25 previously.

Contact the author at giles@proactiveinvestors.com

Quick facts: Silvercorp Metals Inc

Price: 9.67 CAD

TSX:SVM
Market: TSX
Market Cap: $1.69 billion
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