Investing.com -- Bank of America upgraded New Gold (NYSE:NGD) Inc to Buy from Underperform and raised its price target by 50% to $3.90 on strong production growth, declining costs, and rising free cash flow.

BofA highlighted an operational turnaround at New Gold’s two Canadian mines, New Afton in British Columbia and Rainy River in northwestern Ontario.

Investments in waste stripping, underground development, and operational optimization have positioned both mines for stronger performance.

“NGD = an unfolding operational turnaround that is driving strong gold and copper production growth, falling unit costs, and an inflection higher in free cash flow; plus strong jurisdictional exposure, and an attractive valuation,” BofA said

BofA raised its net asset value (NAV) estimate for New Gold by 19%, reflecting new mine plans and improved operational forecasts.

It increased its NAV valuation multiple to 1.25x from 1.00x, citing New Gold’s stronger investment profile.

Gold production is expected to grow 18% in 2025 to 351,000 ounces, with all-in sustaining costs (AISC) dropping 25% to $1,049 per ounce.

In 2026, BofA forecasts a 32% increase in gold production to 464,000 ounces, while AISC could fall 83% to $624 per ounce — the lowest in its coverage.

Earnings per share forecasts were also raised significantly, with 2025 EPS now expected at $0.33, up from $0.15, and 2026 EPS at $0.58, up from $0.32.

BofA noted that New Gold still trades at a discount to mid-tier and junior gold peers on P/NAV and 2025-2026 EV/EBITDA, despite its improving outlook.

BofA rate New Gold Buy, as key growth projects at New Afton and Rainy River will drive strong growth, lower costs, and higher free cash flow

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