In 2007, Barclays (LSE: BARC) hit a high of around 790p. Back then, few people could have predicted that the bank’s share price would collapse within the next couple of years to reach a low of just over 50p. And while it’s now trading three times that figure at 150p, Barclays’ future appears to be highly uncertain.

A key reason for that is Brexit. Although Barclays is a global company, it still has significant operations in the UK and is highly dependent on the UK and wider European economies for its growth. Brexit may prove to be a good or bad thing in the long run, we simply do not know. But in the short run, it now seems likely that there will be a slowdown of some sort resulting from the uncertainty surrounding Brexit. For Barclays, this would be bad news and it reduces the chances of its shares making a sustained recovery.

Another risk facing Barclays is its strategy. The bank recently appointed a new CEO and while a refreshed strategy including a reduction in dividends may prove to be the required catalyst to boost Barclays’ earnings, in the meantime it’s causing investor sentiment to come under pressure. This has meant that Barclays’ share price has fallen by 32% since the turn of the year and while its shares are cheap, further falls can’t be ruled out in the short-to-medium term.

Upward rerating potential

On the topic of Barclays’ valuation, the bank continues to offer major upward rerating potential. It has a price-to-book (P/B) ratio of 0.4, which indicates that it’s dirt cheap. Certainly, asset writedowns can’t be ruled out given the uncertain outlook for the UK and European economies. But such a large discount to net asset value is hard to justify and this indicates that Barclays is a worthy purchase for the long run, given its high quality asset base, strong management team and global exposure.

In terms of whether it will be able to reach its previous high of 790p per share, Barclays may struggle to do so over the medium term. But it still offers stunning upside potential. Even if it was to trade at net asset value, which would still indicate that its shares are cheap, Barclays would be valued at 375p per share. And with a premium of 50% to net asset value being very achievable given robust economic conditions and the ability of Barclays to execute its growth strategy, this would lead to a share price of around 560p.

Clearly, this is still well below the 790p per share achieved in 2007, but nevertheless Barclays still offers excellent upside for patient, long-term investors. Although its share price may remain volatile in the coming months and possibly years, Barclays remains a high quality company trading on an exceptionally low valuation.

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Peter Stephens owns shares of Barclays. The Motley Fool UK has recommended Barclays. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.