Anyone buying Barclays (LSE: BARC) shares at the beginning of 2024 must be patting themselves on the back now. The share price has more than doubled in value since, while paying out plenty of chunky dividends. An investor who put £1,000 into the Blue Eagle bank would now be sitting on £2,630.
After such a dizzying run-up — one of the highest gains across the entire FTSE 100 index — you could be forgiven for thinking the party might be over and the best of the returns from Barclays have been and gone. Well, guess what? Maybe it’s just getting started…
Ratings
One reason to think so is the spectacular ratings on Barclay from analysts at the moment. Of the 19 analysts covering the stock, there’s not a single Sell and nearly 90% are either Buy or Outperform ratings.
The share price forecasts look pretty impressive too. The consensus target is for a 32.1% increase over the next 12 months and on the high end we have a 44.3% increase. There aren’t many Footsie stocks that can say that.
An investor who was still hanging on to the £2,630 would see it shoot up over the next year if those targets are on the money. The consensus would turn the sum into £3,474 by April 2027, and the highest target would turn it into £3,795.
That’s not mentioning dividends either. The forecast dividend yield stands at a healthy 3.5%. That’s around the FTSE 100 average at the moment.
What next?
How likely are these predictions going to be? Well, the conflict in Iran will have some impact here. The consequences like pricier energy and increasing inflation could dampen the global economy, which tends to be bad for banks. The Barclays share price has already dipped 18% since just before the start of the conflict. It’s anyone’s guess how long or impactful that particular issue will be however.
It also should be mentioned that analyst ratings for the banking sector can sometimes be quite optimistic. And analyst ratings in general aren’t close to being any kind of guarantee.
In among it all, there’s plenty to get excited about in terms of fundamentals. The forward price-to-earnings ratio is only 7. It’s pretty hard to find that kind of value in any sector these days. It could be a strong sign that Barclays shares are still undervalued.
Earnings are set to continue rising too – and might get an extra boost if we see interest rates stay high or even increase in the coming years. And a new round of £1bn buybacks could see some upward movement from the share price. I’d say the shares are worth considering at the current price.
