Coeur Mining (NYSE:CDE) saw its shares climb 7.7% to $17.46 during midday trading on Wednesday, as investors positioned ahead of the company's second-quarter earnings release, scheduled for after the market close. The precious metals producer's stock has been buoyed by a broader rally in gold and silver prices, with spot gold up 4.4% to $4,256.85 and silver gaining 4.9% to $62.44 by early afternoon.
The upcoming earnings report carries particular weight as it marks Coeur's first full quarter including contributions from the recently acquired New Afton and Rainy River mines. In the first quarter, those operations were included for just 11 days, making year-over-year comparisons particularly complex.
A key challenge for analysts and investors alike is the significant change in the company's share structure following the acquisition. Coeur issued 392.7 million new shares, bringing its total outstanding shares to 1.035 billion. This represents a 48% increase over the weighted average share count recorded in the first quarter, complicating earnings per share (EPS) calculations.
To illustrate the impact, if the company's first-quarter adjusted profit of $253.5 million were applied to the new share count, EPS would be approximately $0.25, compared to the reported $0.36. To maintain that EPS level, net income would need to rise to around $372 million, an increase of roughly 47%.
These figures are preliminary estimates and not company guidance. They assume no significant share repurchases in the second quarter and do not include full-quarter results from the acquired mines. As a result, the focus will be on cash generation, with adjusted EBITDA and free cash flow needing to surpass the higher baseline set by the increased share count.
The broader precious metals sector also rallied, with several silver-focused miners outperforming bullion-backed ETFs. Hecla Mining (NYSE:HL) rose 8.5% to $16.70, First Majestic Silver (NYSE:AG) gained 7.1% to $17.66, and Pan American Silver (NYSE:PAAS) advanced 7.2% to $48.14. The iShares Silver Trust (NYSEARCA:SLV) was up 4.3% at $56.17, while the SPDR Gold Shares (NYSEARCA:GLD) rose 4.1% to $389.48.
Independent metals trader Tai Wong noted, "Early adopters are getting back into precious metals," citing softer rate-hike expectations and a declining dollar as catalysts for the sector's strength.
Coeur's first-quarter results showed strong year-over-year growth, with revenue of $856.2 million compared to $360.1 million in the prior-year period. Adjusted EBITDA reached $474.9 million, up from $121.9 million, while free cash flow improved to $266.8 million from $17.6 million. However, free cash flow softened compared to the fourth quarter's $313.2 million.
Management maintained its full-year production outlook in May, but a midpoint analysis suggests significant acceleration is needed in the second half of the year. Gold output must average about 217,000 ounces per quarter to hit the midpoint of 747,500 ounces, more than double the 96,503 ounces produced in Q1. Silver and copper requirements are similarly demanding, especially given New Afton's limited contribution in Q1.
Sell-side analysts remain largely bullish, with a consensus Buy rating and an average price target of $24.84, implying upside of about 42% from current levels. Targets range from $18.75 to $40, with CIBC's Cosmos Chiu maintaining the highest target at $40. Recent ratings include RBC Capital Markets' Josh Wolfson at $23.00, Scotiabank's Eric Winmill at $28.50, and Roth MKM's Joseph Reagor at $21.00.
Investors will scrutinize Wednesday's release for mine-level costs, grades, recoveries, and cash conversion details, as well as the weighted share count and any repurchase activity. The earnings call is scheduled for Thursday at 11 a.m. EDT.
Key risks include fluctuating precious metals prices, operational challenges at the newly integrated mines, and potential purchase-accounting impacts on reported unit costs.
