stockwatch Globe says analysts slash share targets for New Gold
2022-07-13 08:29 ET - In the News
The Globe and Mail reports in its Wednesday, July 13, edition that several analysts have slashed their price targets on New Gold in reaction to weaker-than-expected second quarter production and downward revisions to 2022 guidance. The Globe's Darcy Keith writes that the company reported quarterly production that was down 20 per cent from the previous quarter. That was well below estimates from some analysts, mostly because of lower grade ore processed at its Rainy River operations amid rainfall and pit flooding. Production guidance for 2022 was cut 16 per cent to a range of 325,000 to 365,000 ounces, and costs are expected to be higher as well. RBC Capital Markets analyst Michael Siperco cut his price target to $1 (U.S.) from $1.50 (U.S.). He rates the shares "sector perform." Analysts on average target the shares at $1.62 (U.S.). Mr. Siperco says in a note: "We expect a negative market reaction to the results and the weaker 2022 outlook. That said, we had already expected a materially weaker year in 2022. ... While these results are disappointing, the longer thesis appears intact. Higher production from the UG mine at Rainy River and the C Zone at New Afton should drive substantial free cash flow from 2024 onwards."