Goldman Sachs has removed Petra Diamonds (LON:PDL) from its buy list and lowered its target price to 130 pence per share from 200 pence after the diamond miner reduced its production guidance.
The FTSE 250 group on Wednesday slashed its production guidance for 2013 by 250,000 carats to 2.85 million carats, which is still above Goldman’s forecast of 2.8 million carats. However, the long term target of five million carats by 2019 was reaffirmed.
On the back of the update, Goldman downgraded Petra to ‘neutral’ from ‘buy’, saying that it sees “greater upside elsewhere in our coverage”.
Goldman noted that since adding Petra to the investment bank’s buy list in May this year, its shares have slumped 28.9 percent compared with a decline of 4.6 percent in the FTSE World Europe benchmark.
Over the past 12 months, shares have shed nearly 24 percent, while the benchmark was up 0.6 percent.
Additionally, Goldman has lowered its diamond price forecasts due to a decline in end demand from China and the US, which together account for more than half of the polished market.
“Despite the short term macro headwinds our positive long term outlook for diamond prices remains unchanged but given current high level of uncertainty in the US and China and the liquidity issues in India we expect the next 12 months to be difficult for the industry,” said analyst Eugene King.
Goldman noted that its price target is sensitive to a change in growth over the next 24 months.