Bullish Zacks Article Overlooks PAAS's Valuation and Silver Price Risks Amid DeepValue's Sell Call

What happened

A Zacks article from February 6, 2026, promotes PAAS as a buy due to a perceived industry discount, citing strong silver output and growth from the MAG Silver deal. However, the DeepValue master report contradicts this, noting PAAS has rallied 151% over 12 months to trade at 32.6x EPS and 19.0x EV/EBITDA, embedding optimistic silver price assumptions. The report highlights speculative silver price volatility, with risks of mean reversion toward $60-70/oz, and points to cost creep in 2026 AISC guidance as a concern. Despite operational strengths like record free cash flow and low-cost assets, the stock's valuation offers minimal margin of safety and is vulnerable to downside. Therefore, the bullish article may mislead investors by ignoring critical financial and commodity risks identified in the comprehensive analysis.

Implication

New buyers face poor risk-reward with potential 20-30% downside if silver prices correct from bubble-like highs, as highlighted by DeepValue's bear case. Existing holders should consider trimming positions above $65, aligning with DeepValue's advice to lock in gains amid elevated multiples. PAAS's high beta to silver prices makes it susceptible to market sentiment shifts, requiring vigilant monitoring of macroeconomic trends. The company must execute its H2-weighted 2026 production plan flawlessly and maintain cost discipline to justify current valuations, which is a tall order. Patient investors are better off waiting for a re-entry point in the mid-$40s or after a reset in expectations, as the current setup skews negatively.

Thesis delta

The Zacks article does not alter DeepValue's bearish thesis; it merely reflects market optimism without addressing the valuation overhang or silver's speculative nature. The core thesis remains a potential sell, emphasizing that current prices offer poor long-term value due to embedded risks and mean reversion potential. Investors should disregard superficial discount narratives and focus on fundamental caution, as no shift in the underlying risk assessment is warranted.