Barclays’ (LSE: BARC) (NYSE: BCS.US) shareholders have every right to be unimpressed with the bank’s performance so far this year.
Indeed, year to date Barclays’ shares have dropped more than 10% as the bank has released a wave of bad news, including the revelation that profits slumped 30% during 2013.
However, Barclays’ shares could be about to reverse their declines and push higher, as the bank is set to update shareholders on a number of key issues during the next few weeks.
Waiting for an update
For the past few weeks, Barclays’ investors have been left in the dark regarding the bank’s future plans. Unfortunately, the market hates uncertainty and without an update on Barclays’ long-term outlook and goals, investors have been turning their back on the bank.
Luckily, investors should get an update on the bank’s progress when it releases its first quarter interim management statement on April 30th . Investors will then get a further update when Barclays publishes it strategic review around a week after the interim statement.
These two events should provide some clarity on the bank’s outlook. Although, it would appear as if investors have already been given a taste of things to come, as at the end of last week, chief executive Antony Jenkins let slip that the strategic review is likely to result in hundreds of job cuts and more cost cutting.
Further, Barclays announced at the end of last week that the bank intends to pull out of commodities trading, instead focusing on more profitable areas of investment banking.
Valuation is to low
Unless Barclays issues some terrible news at the beginning of May within the strategic review, the bank’s shares look set to leap higher. Indeed, at current levels it would appear as if the market has already priced the worst case scenario, leaving no room for positive surprises.
For example, current City figures suggest that Barclays trades at a 2014 P/E of 8.7 and a 2015 P/E of 7 with a yield of 3.9% and 5.4% respectively for each year. This means that Barclays is cheaper on a forward basis than peers, Lloyds and RBS which trade at a forward P/E of 10 and 12.8.
So all in all, it looks as if Barclays’ shares have no where to go but up during the next few weeks.
