Can the Barclays share price climb another 20% after its recent stellar run? Analysts think so

The Barclays (LSE: BARC) share worth has been on a tear, hovering 65% over the previous 12 months and an eye-popping 110% over two. 

That makes it one of many FTSE 100’s hottest shares, and dependable traders are lastly seeing good-looking returns after years of wrestle. However after such a powerful rally, can the momentum proceed?

I’m all the time cautious about chasing a inventory that’s already loved a large run. Additionally, there are indicators of a slowdown, with Barclays shares dipping 2% within the final month. 

Can this FTSE 100 financial institution hold going?

But the inventory nonetheless seems low-cost to me. It trades at simply 8.4 occasions earnings, whereas its price-to-book ratio sits at 0.6. That’s nicely beneath the 1.0 usually seen as honest worth for banks.

For revenue seekers, the dividend yield has dropped to 2.8% after the rally. However I wouldn’t be too dissatisfied by that. The ahead yield is forecast to rise to three%, and it’s lined a whopping 4.6 occasions by earnings. That’s an extremely robust cushion, suggesting loads of room for additional hikes.

In February, Barclays stated it’ll reward shareholders with one other £1bn share buyback after a bumper set of full-year outcomes. These noticed pre-tax income soar 24% to £8.1bn. Funding banking revenue rose 7% to £11.8bn as dealmaking bounced again.

The ultimate quarter confirmed the momentum gathering tempo, with This fall income spiralling from £100m to £1.7bn 12 months on 12 months. All this helped drive the shares to their highest degree since 2010. However the board did put aside £90m for potential prices from the motor finance mis-selling scandal. 

In fact, banks are by no means removed from hassle. Earlier this month, Barclays suffered a three-day IT meltdown that left prospects locked out of their accounts. The financial institution is now set to pay as much as £7.5m in compensation. In as we speak’s digital-first world, that sort of disruption simply isn’t acceptable, particularly given the drive to shutter branches. It partly explains the latest share worth dip.

Share buybacks and development hopes

The 17 analysts masking Barclays produce a median worth goal of just about 357p. If appropriate, that’s a stable enhance of just about 20% from as we speak’s 297.5p. Mix that with the dividend yield, and traders could possibly be a complete return of greater than 23%.

In fact, forecasts are simply that – forecasts. In as we speak’s unsure world, loads might change. 

Whereas greater rates of interest have boosted Barclays’ margins, in addition they threat squeezing the worldwide financial system and pushing up debt impairments. If debtors begin struggling, dangerous loans might eat into income. In contrast to most FTSE 100 banks, Barclays nonetheless has a foot within the US, and will take a success if the North American financial system continues to wrestle.

Barclays nonetheless has loads of room to develop, and its valuation stays engaging. Trying forward, the group expects to generate round £12.2bn in web curiosity revenue for 2025, up from £11.2bn. Working margins are anticipated to climb from 30.3% to 38.3% this 12 months.

For these trying so as to add publicity to banking shares, it’s actually one to contemplate. 

There are indicators that it may hold the social gathering going for some time but. Brokers appear to suppose so. However after doubling in two years, traders shouldn’t count on one other quickfire surge.