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To estimate First Majestic Silver's stock price if silver hits $100 per ounce, we can use a free cash flow (FCF) valuation method based on the company's projected performance at higher silver prices. Here's how to break it down:
### Key Assumptions from the Data:
- Projected Free Cash Flow (FCF) at $100 silver: $2 billion.
- Valuation multiple: 10x FCF (as suggested in the scenario), which would give the company a valuation of $20 billion.
- Shares outstanding: Approximately 300 million shares (estimate based on recent figures).
### Calculation:
1. Market Cap at $100 Silver:
- With $2 billion in FCF and a 10x multiple, the company's market cap would be around $20 billion.
2. Stock Price Estimate:
- To estimate the stock price, divide the projected market cap by the number of shares outstanding:
\[
\text{Stock Price} = \frac{\text{Market Cap}}{\text{Shares Outstanding}} = \frac{20,000,000,000}{300,000,000} = 66.67
\]
- So, the stock price would be approximately $66.67 per share at $100 silver.
### Conclusion:
If silver hits $100 per ounce and First Majestic reaches its projected FCF, the stock could potentially rise to around $66.67 per share, assuming the company meets its cost targets and production increases without further major setbacks. This estimate is based on a 10x FCF valuation.
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