Barclays: Shares in FTSE 100 giant near decade high after upgrade
Barclays has received a major boost after the FTSE banking giant posted a bumper first quarter, driven by a strong performance in its investment arm.
Analysts at RBC have upgraded Barclays’ shares, slapping a 340p target price on the stock – a 14 per cent increase.
Shares edged up 0.2 per cent during early trading on Tuesday, notching a near decade high at above 314p. On Monday, shares hit 318.50p before closing at 313.30p.
The lender has gained over 17 per cent since the beginning of 2025 and 46 per cent over the last 12 months.
An upside scenario could have the bank’s stock price hitting 370p, equity analysts Benjamin Toms and Pablo de la Torre Cuevas said.
They forecasted a near £11bn of returns to shareholders by the end of 2026, through a combination of dividends and buybacks.
The analysts said the bank would outperform the sector average in the coming 12 months.
Investor caution holding Barclays back
Toms and Cuevas said “Barclays should be trading at a higher multiple,” but investor sentiment amidst the geopolitical climate had increased caution.
“We see Barclays current valuation as a good entry point, although exposure to US consumers and investment banking is likely to be seen as a reason not to own this stock relative to other UK banks, until the rhetoric around global trade wars subsides,” the analysts said.
Barclays faced a tumultuous period in the fallout of President Donald Trump’s ‘Liberation Day’ which imposed sweeping tariffs on US trading partners. Shares sank as low as 241.85.
But after the President announced a 90-day pause, the bank’s stock led the FTSE 100 rebound. Shares soared 20 per cent as markets opened after Trump’s retreat.
Despite the turmoil, Barclays booked a £2.7bn pre-tax profit in the first-quarter, ahead of the £2.5bn pencilled in by analysts as its investment banking arm cashed in on the market storm.
Investment bank income jumped 16 per cent to £3.9bn, compared to £3.3bn in the first quarter of 2024.
However, Barclays recorded a loan loss rate – the percentage a lender believes loans will not be repaid – of 61 basis points and reserved a £74m provision for “elevated US macroeconomic uncertainty”.
RBC analysts noted a drastic outcome of the Financial Conduct Authority’s (FCA) review of motor finance could hinder the bank’s rating and share price.
A ruling from the Supreme Court is expected in early summer and the FCA has pledged a redress scheme within six weeks, if an adverse ruling is handed to the lenders.
The highest court in the land will decide whether to uphold the Court of Appeal’s October ruling that it was unlawful for banks to pay a commission to a car dealer without the customer’s informed consent.
Barclays has put aside £90m in provisions for potential payouts.