A-Mark Precious Metals Sees Volume Opportunities Despite Margin Compression: Analyst

B. Riley Securities analyst Lucas N. Pipes lowered the price target on A-Mark Precious Metals Inc AMRK to $45 from $54 and maintained a Buy rating. 

The analyst updated the estimates following the company's filing of 10-K last week. 

Pipes reduced estimates for Q1 FY24 EPS to $0.97 from $1.38 per share on lower DTC margins and adjusted EBITDA to $32.3 million from $45.3 million, with expected average price for gold and silver of $1,955/oz and $24/oz, respectively. 

The analyst projects lower EBITDA contribution from both wholesale sales & ancillary services and direct-to-consumer segments in Q1.

Nevertheless, Pipes thinks the company is well positioned for M&A, on a strong balance sheet and available liquidity, and sees its successful track record of acquisitions as a competitive advantage.

The analyst notes that despite the margin compression, the company sees the low-margin environment as an opportunity to attract new customers and boost volumes.

The analyst revised estimates for EPS and EBITDA to $4.73 (from $5.28) and $154.6 million (from $175.7 million) for FY24 and $5.61 (from $4.73) and $184.8 million (from $173.8 million) in FY25.

Price Action: AMRK shares are trading lower by 2.7% at $29.80 on the last check Monday.