Barclays share price continued its strong surge this year, reaching its highest point since October 2017. It has jumped by over 425% from its lowest level in 2020, making it one of the best-performing banking stocks in London. This article explains why the BARC stock price may hit 400p.
Barclays business is doing well
Barclays, one of the biggest European banks, is doing well as it continues beating its targets.
The most recent financial results showed that its statutory return on tangible equity (RoTE) rose to 14%, a big increase from 12.3% in the same period last year.
Barclays’ income of £7.7 billion was 11% higher than in the first quarter of last year. This growth was spread across all its business segments, with the UK income growing by 14%.
The UK Corporate Bank income jumped by 12%, while its private bank and wealth management, investment bank, and US consumer bank rose by 12%, 16%, and 1%, respectively.
Notably, Barclays emerged as one of the top beneficiaries of the recent volatility in the stock market as its trading boom jumped. The closely-watched Fixed Income, Currencies, and Commodities (FICC) income rose by 16% to £2.6 billion.
FICC’s business did well because of the rising volatility in the market due to Donald Trump’s tariff policies. In this, fixed income increased by 21% to £1.6 billion, while equities rose by 9%.
Barclays’ investing banking business also improved, even as dealmaking trends remained worrying. Recent data shows that M&A deal design dropped to a 20-year low because of Trump’s policies. Barclays’ investment banking income rose by 16%
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Growth to continue
Barclays’ management expects its business to continue doing well in the coming years. It hopes that its RoTE will be 11% this year, while its net interest income (NII) will be higher than £12.5 billion.
The company also hopes that its RoTE will get to 12% in 2026, while its total income will get to £30 billion.
Most importantly, the company is seeking to boost its returns to shareholders. The goal is to keep its dividend stable at 2023 levels, with progressive dividend per share growth because of its share repurchases.
Barclays has been reducing its outstanding shares through buybacks. It ended the last quarter with 14.33 billion outstanding shares, down from 17.31 billion in 2020. Its goal is to return £10 billion to investors between 2024 and 2026, a substantial amount that represents about a sixth of its valuation.
Baclays is also working to reduce its costs and boost its UK business. It plans to cut about 200 jobs, and has hired McKinsey to find more savings in its investment bank.
Barclays is also emerging as the leading contender to buy TSB, the bank owned by Banco Sabadell. If it wins the bid, it will be the third major transaction after it acquired Tesco Bank and Kensington Mortgages.
Barclays share price analysis
The daily chart shows that the Barclays stock price has been in a strong uptrend in the past few months. It recently jumped and peaked at 333.90p and then retreated to the support at 315p.
This retreat was notable as it retested a level where it formed a double-top pattern. Therefore, it has formed a break-and-retest pattern, often leading to more gains.
Barclays share price has remained above the 50-day moving average, a sign that bulls are in control for now. Therefore, the most likely scenario is where the stock rebounds and possibly retests the psychological point at 400p. A drop below the support at 315p will invalidate the bullish view.
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