Here are the latest share price forecasts for Barclays

Analysts are divided on the outlook for the Barclays share price. But Stephen Wright thinks the bank could benefit from falling interest rates.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Since the start of the year, the Barclays (LSE:BARC) share price has jumped from £1.55 to £2.42, making the stock one of the FTSE 100’s best performers of 2024. But what’s next?

Created with Highcharts 11.4.3Barclays Plc PriceZoom1M3M6MYTD1Y5Y10YALL22 Oct 201922 Oct 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

The average analyst price target’s around 13.5% higher than the current share price. And there are some clear signs things could be set to improve for the bank. 

Analyst expectations

The average price target for Barclays shares is £2.75, implying optimism in the stock. But there’s quite a wide range of forecasts and not all are so positive.

Should you invest £1,000 in Legal & General right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General made the list?

See the 6 stocks

The highest estimate I can find is £3.30, which is 36% above the current share price. But the lowest is £2, which implies a decline of around 17%.

Source: TradingView

This is a good illustration of why I wouldn’t be willing to buy Barclays shares simply based on what analysts say. There’s fairly substantial disagreement and it’s hard to know who to believe.

Predicting the next 12 months is clearly a challenge. But investors may be able to get some ideas from looking at what’s been going on elsewhere in the banking sector. 

A diversified bank

Barclays operates a significant investment banking division as well as its retail lending arm. In this way, it’s more like Bank of America (BoA) and Citigroup than Lloyds or NatWest.

Both BoA and Citigroup reported earnings this month and there were similar themes. Interest rates starting to fall resulting in lower lending margins, but higher investment banking revenues. 

The Bank of England has also been cutting interest rates. And while banks might make less money on their loans, Barclays could benefit from higher investment banking activity.

That’s a sign the company’s share price could do well over the next 12 months – especially relative to other UK banks. But there’s an important risk investors should consider as well. 

Valuation

Right now, Barclays shares are trading at a level that reflects an optimistic outlook. The stock’s trading at around 62% of its book value – the difference between its assets and its liabilities.

Barclays P/B ratio 2015-24


Created at TradingView

That’s towards the higher end of where it has been trading over the last decade. And it’s a sign investors are positive on the company’s ability to earn a good return on equity going forward.

This is something investors should be cautious of in the current environment. To some extent, future investment banking growth might already be reflected in the current share price.

That means the prospect of lower lending margins is a clear risk for investors. If things don’t go as planned, the stock’s valuation multiple could contract, causing it to fall significantly.

A stock to consider buying?

Arguably, forecasting accurately what might happen with Barclays in the next 12 months is harder than it is with other UK banks. This is due to the company’s unique structure.

From a long-term perspective though, the combination of retail operations with an investment banking division is one I like. So I’d rather buy shares in Barclays than Lloyds or NatWest.

I don’t think the share price is that attractive at the moment. But the thing with bank stocks is that opportunities tend to present themselves sooner or later to patient investors like me.

But there may be an even bigger investment opportunity that’s caught my eye:

Investing in AI: 3 Stocks with Huge Potential!

🤖 Are you fascinated by the potential of AI? 🤖

Imagine investing in cutting-edge technology just once, then watching as it evolves and grows, transforming industries and potentially even yielding substantial returns.

If the idea of being part of the AI revolution excites you, along with the prospect of significant potential gains on your initial investment…

Then you won't want to miss this special report inside Motley Fool Share Advisor – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And today, we're giving you exclusive access to ONE of these top AI stock picks, absolutely free!

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Stephen Wright has positions in Citigroup. The Motley Fool UK has recommended Barclays Plc and Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Can the Rolls-Royce share price hit £13 in the coming year?

After a stunning couple of years for the Rolls-Royce share price, can it keep up its recent momentum? This writer…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s how a £20k ISA could produce £1,580 of passive income in the next year

A Stocks and Shares ISA stuffed with dividend shares can be a lucrative source of passive income. Christopher Ruane explains…

Read more »

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »