Barclays raises price targets for Glencore, Anglo American and Rio, amongst others
Barclays has sounded a cautious note to iron ore miners and investors, following an examination of the Chinese steel supply chain.
According to the bank’s analysis, demand is slowing in “most key end markets.”
Having said that, though, the bank remains optimistic that the miners themselves – and not just in iron ore – continue to offer good value, given that on many metrics they are trading at multi-year lows.
The sector continues to be buffeted by negative publicity, but that in turn has meant that total shareholder returns from dividend yields alone have become very attractive. The miners are also showing “still-impressive EPS momentum,” the bank said.
Barclays favours in particular, Anglo American (LON:AAL), Glencore (LON:GLEN) and Endeavour Mining (TSE:EDV). Of those three, Anglo is the only company with significant iron ore operations, and even these are not on the scale of the big hitters Rio and BHP.
Barclays calculates that its key picks offer an average of 30% potential upside on its estimates, although obviously commodity prices will remain key to future performance.
At the same time, Barclays also reduced its targets for Fresnillo and Hochschild.
The new targets are as follows:
Anglo American 3,820p
Antofagasta 1,200p
BHP 2,500p
Fresnillo 800p
Glencore 355p
Hochschild 185p
Rio Tinto 6,125p