Barclays lowers targets on miners; Anglo American and Randgold spared

With the Chinese economy stagnating and purchasing managers' indices already beginning to roll over elsewhere, a demand shock looked to be ever more unlikely, it said.

Returns on equity continued to be below cost of equity following unprecedented levels of capital expenditure and depreciation, with net debt as a proportion of enterprise value at an all time high and rising. This meant that valuations that could support an investment case remained rare.

Barclays lowered its target price forecasts for a wide swathe of the sector, with only the likes of Anglo American, Petra Diamonds and Randgold Resources avoiding the cull.

It retained an 'underweight' recommendation on Anglo American (with an unchanged target of 225p) and an 'overweight' stance on the shares of the latter two outfits. The target on Petra Diamonds was kept at 125p and that for Randgold at 4,800p.

Its target for Rio Tinto was lowered from 2,800p to 2,000p and that for Antofagasta from 535p to 355p.

However, gold equities, and Randgold in particular, might be a source of relative strength, albeit "with emphasis on relative" Barclays said.