Sector Star | Can $AG Sustain Its 9% Surge as Silver Hits Record Highs?
Major stock indexes closed sharply lower Friday after President Donald Trump threatened "massive" tariffs on China, reversing early gains that saw the Nasdaq hit a fresh record high.
The tech-heavy $NASDAQ(.IXIC)$ tumbled 3.6%, or 820 points, after setting a new intraday record for a second straight session. $S&P 500(.SPX)$ sank 2.7%, or 182 points, while the blue-chip $Dow Jones(.DJI)$ dropped 1.9%, or 878 points.
The best-performing concepts is Precious Metals & Minings. Considering the different perceptions of the stock, this time TigerPicks chose $First Majestic Silver(AG)$ to have a fundamental highlight to help users understand it better.
In the past five days, AG's share price has risen by 9.33%, but fell by 3.64% compared with the same period last year.
$First Majestic Silver(AG)$
First Majestic Silver Corp. is a mining company. The Company is focused on silver and gold production in Mexico and the United States.
Gold recently smashed through the $4,000 barrier, and silver is in hot pursuit, having just breached its own all-time high. It would take a brave creature to bet against a silver miner in this environment. Over the past 15 years, First Majestic Silver has been predictably cyclical and, despite occasional outperformance, has overall lagged the silver price.
Q2 Earnings
Quarterly Production and Cost Performance
First Majestic Silver just posted the kind of quarter long-time shareholders have been waiting for, producing 7.9 million silver equivalent ounces following the Los Gatos acquisition - which was a 48% increase over Q2'2024. The realized silver price averaged $34.62 per ounce (up 24% over the prior comparative period in Q2'2024), and that combination of higher prices and volumes pushed revenue to a record $264.2 million, which is nearly double last year's Q2 level. Net income also swung from a $48 million loss in Q2 last year to a $56.6 million profit in Q2 this year.
First Majestic Silver's balance sheet now looks bulletproof for a mid-tier producer. AG ended Q2'25 with $510 million in cash, its strongest financial position to date - and also has an undrawn $100 million credit facility, giving it significant liquidity headroom. AG has indicated that they aim to become the world's largest primary silver producer, which tells me that investors should expect further acquisitions to come.
The three consecutive years of declining silver output between 2022 and 2024 underscored the need to supplement production, either through new asset acquisition or by advancing exploration and development across existing mines. I think this strong liquidity position gives First Majestic genuine flexibility to act quickly when acquisition or expansion opportunities arise. Furthermore, First Mint, the company's retail bullion arm, continues to gain traction too, with sales more than doubling to $7.8 million.
I think investors would agree that for years, First Majestic Silver has been a story that rarely lived up to its own hype. However, with record cash, rising output, and some operational momentum finally - and with the silver price having just breached its prior all-time high - the narrative around First Majestic Silver is starting to look a lot more interesting.
H1 Highlities
Future Catalysts
Future Catalysts
First Majestic Silver has been leaning hard into exploration this year, launching one of its biggest drill programs yet - with around 255k meters planned and 28 rigs currently active across its mines. I think it is encouraging that they are putting this much focus into growing production organically - as there is a real risk of overpaying for new assets in this environment of record-high silver prices.
Navidad/Winter Discovery
The main excitement is at Santa Elena in Mexico. Drilling there has uncovered three promising new zones - Navidad, Santo Niño, and Winter - that could end up being as large, or even larger, than Hermitano, the deposit that has supplied much of Santa Elena's ore in recent years.
In Nevada, First Majestic has stepped up work at Jerritt Canyon, adding another drill rig to map out new gold-bearing structures. This mine has struggled in the past, but AG is hoping that fresh exploration data will help build a clearer case for a restart down the line.
Elsewhere in AG's portfolio, steady drilling continues at Cerro Los Gatos and San Dimas - aimed at simply replacing what has been mined and extending overall mine life.
AG currently trades nearly one standard deviation below its own five-year average FWD EV/EBITDA premium relative to peers - suggesting an attractive entry point for investors with high conviction in silver.
Risks
I think there are still risks that investors should keep in mind. The ongoing tax dispute with Mexican authorities remains unresolved and could materially impact cash flow if the outcome is unfavourable. Operationally, while Los Gatos provides a meaningful boost, production across other mines remains somewhat uneven, and exploration success is never guaranteed.
Although I see it as an encouraging signal that silver prices closed this week above $50, with implied 1-week volatility at 27 versus the 6-month average of 22 - a big retracement lower in silver prices could cause investors in AG to take a big knock if they are not able to stomach that volatility.
Conclusion
The Mexican tax dispute is still a cloud, but the setup looks too good to ignore. Silver just breached its prior all-time highs, Los Gatos just turbocharged output, and exploration rigs are buzzing across Mexico and Nevada.
Cash is stacking up, the balance sheet is solid, and operations are finally firing on all cylinders. AG's relative valuation vs peers also points to this being a decent entry point.
Stock Price Forecast:
Here are the target price forecasts for the next 12 months from analysts.
Based on 5 Wall Street analysts offering 12 month price targets for First Majestic Silver in the last 3 months. The average price target is $19.76 with a high forecast of $37.10 and a low forecast of $9.00. The average price target represents a 49.24% change from the last price of $13.24.
Resource:
https://seekingalpha.com/article/4829292-first-majestic-silver-soaring-as-silver-breaches-all-time-highs
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We could see silver close in the higher $50s end of year.