UBS Starts Coverage of Silver Miners
Tuesday July 25, 3:47 pm ET
UBS Analyst Starts Coverage of Three Silver Companies at 'Buy' Rating, One at 'Neutral'
NEW YORK (AP) -- Climbing silver prices prompted UBS to begin coverage of several silver miners on Tuesday, and the analyst said the metal's recent volatility could offer lustrous returns.
Silver prices have surged from about $7 an ounce a year ago to more than $15 in May. Although prices have retreated to around $11 an ounce since then, the market's volatility could make for potential higher returns, said UBS analyst Craig West in a recent client note.
West began coverage of Silver Wheaton, Pan American Silver Corp. and Silver Standard Resources Inc. at "Buy" ratings, and Coeur d'Alene Mines Corp. at "Neutral."
"As gold's poor cousin, silver is affected by lower physical stocks than gold, resulting in higher price volatility similar to that of the base metals," said West. "This higher volatility does pose higher risk, but also the potential for higher returns."
Silver prices are about 10 percent to 15 percent more volatile than gold prices, the analyst said.
UBS has a bullish outlook on silver prices, with a target of $15 an ounce in 2007. Investment demand -- such as that from new exchange-traded funds that track silver -- combined with a weaker U.S. dollar and gold strength should continue to bolster silver prices.
West said the three "Buy" rated companies each have something to offer investors. Silver Wheaton trades with high leverage to the metal price. Pan American has a solid record of growth and aims to double production by 2009, while Silver Standard is an explorer with substantial resources.
Silver Wheaton shares rose 35 cents, or 4 percent, to $9.13 in late trading on the New York Stock Exchange. Silver Standard shares rose $1.03, or 5.5 percent, to $19.64. Nasdaq-listed Pan American Silver jumped 63 cents, or 3.8 percent, to $17.25.
Shares of Coeur d'Alene rose 9 cents, or 2 percent, to $4.62 on the NYSE.
Silver closed down 2 cents to $10.90 an ounce on the New York Mercantile Exchange.
