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New Gold Up 10% Following Earnings Beat, But Analyst Remains Skeptical – New Gold (NGD)



New Gold Inc (NYSE:NGD) shares gained greater than 10% on Friday after the corporate reported a third-quarter earnings beat, however no less than one analyst stays skeptical of the gold producer’s long-term upside.

The Analyst: Financial institution of America analyst Michael Jalonen reiterated his Underperform ranking and $1.25 worth goal for New Gold.

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The Thesis: On Friday, New Gold reported third-quarter adjusted EPS of three cents, beating consensus analyst estimates of two cents. Nevertheless, third-quarter income of $180 million missed analyst expectations of $192.3 million. Income was up 3.5% from a 12 months in the past.

New Gold reported money value and all-in sustaining prices (AISC) of $966 and $1,408/GEO (gold equal ounce) within the quarter, roughly consistent with Janonen’s estimates. The corporate generated a unfavorable free money move of $1.1 million, down from a constructive free money move of $4.7 million a 12 months in the past.

New Gold additionally maintained its full-year 2021 manufacturing steering of between 405,000 and 450,000 GEO.

New Gold can be creating an underground mine plan research for its Wet River property that can be launched within the first quarter of 2022. Jalonen stated any plan that might prolong Wet River’s manufacturing previous 2028 would probably have a constructive affect on his web asset worth estimate for the corporate.

On Friday, Jalonen stated New Gold’s FCF continues to create danger for traders.

“We charge New Gold shares as Underperform on issues round liquidity, allowing, execution and valuation, significantly within the short-term,” Jalonen stated.

Financial institution of America is projecting a full-year FCF of $23 million in 2021 and $154 million in 2022.

Benzinga’s Take: New Gold’s numbers weren’t significantly spectacular, a lot of Friday’s transfer could merely be a reduction rally or a continuation of a technical uptrend that’s been in place because the starting of October. Even after the massive post-earnings transfer, New Gold shares are nonetheless down 19% general in 2021.

Picture by Sharon McCutcheon on Unsplash

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