BMO Capital analyst Brian Quast maintained a Buy rating on New Gold (NGD – Research Report) today and set a price target of C$5.50.
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Brian Quast has given his Buy rating due to a combination of factors involving New Gold’s operational updates and future potential. While the technical reports for the Rainy River and New Afton mines were initially negative for valuation, they revealed extended mine lives beyond previous expectations, signaling longer-term production stability. The updated three-year production guidance indicates some fluctuations, with a decrease expected in 2025, followed by an increase in 2026, and new guidance for 2027. This suggests a strategic alignment towards longer-term performance.
Additionally, the New Afton mine’s increase in mineral reserves and life extension hints at future growth opportunities, especially from potential zones that could further extend its operational life. Despite challenges at Rainy River, including a decrease in mineral reserves, the extension of its mine life by five years through strategic deferrals indicates a focus on maximizing asset utility. Although near-term free cash flow is expected to decrease, the end of a capital expenditure-heavy period positions the company to generate significant free cash flow in the years to come. These factors collectively support the Outperform rating, with a focus on optimizing Canadian operations.
According to TipRanks, Quast is a 5-star analyst with an average return of 11.2% and a 53.70% success rate. Quast covers the Basic Materials sector, focusing on stocks such as Eldorado Gold, Lundin Gold, and New Gold.
In another report released on February 11, National Bank also maintained a Buy rating on the stock with a C$6.00 price target.