Barclays edges higher as investment flags ‘seriously attractively valued' growth story

UBS reiterated a Buy on Barclays and raised its price target to 515p (from 455p), saying the bank enters 2026 with strengthening momentum and one of the most attractive growth profiles in the sector; UBS expects a Feb. 10 strategic update to set a statutory return on tangible equity above 13% for 2028 and forecasts 2027 adjusted EPS 44% higher than 2025, noting management’s record of outperformance. Analysts pointed to progress across divisions—Barclays UK benefiting from the structural hedge and the Tesco Bank/Kensington deals, UK Corporate showing better margins and lending, and the investment bank beating consensus for seven quarters—while the proposed Best Egg deal keeps US Consumer outcomes contested but not decisive. Trading at about 7.9x 2026 and 6.9x 2027 earnings and ~1.1x tangible NAV, UBS calls the stock “seriously attractively valued,” estimates an 8.4x multiple under plan and c.19% upside to its target; shares rose just under 1% to 440.35p.

Analysis

UBS reiterated a Buy on Barclays and raised its price target to 515p from 455p, citing strengthening momentum into 2026; the shares rose just under 1% to 440.35p on the news. UBS expects Barclays to announce refreshed strategic targets on 10 February, including a statutory return on tangible equity above 13% for 2028, and forecasts 2027 adjusted EPS 44% higher than 2025, positioning underlying earnings growth as a core rationale for the upgrade.

Analysts highlighted division-level progress: Barclays UK benefits from the structural hedge plus the Tesco Bank and Kensington acquisitions, UK Corporate has delivered better margins and higher lending volumes, and the investment bank has outpaced consensus for seven consecutive quarters. The US Consumer franchise remains the main execution risk given the contested Best Egg acquisition, but UBS judges that outcome non-decisive for the investment case and values the stock on low multiples rather than deal outcomes.

Valuation and upside underpin the call: Barclays trades at c.7.9x 2026 and 6.9x 2027 earnings and ~1.1x tangible NAV, and UBS models an 8.4x 2027 multiple under plan implying ~19% upside to its target; the market-impact score (0.32) and moderately positive sentiment indicate a measured near-term response rather than a dramatic rerating. Investors should monitor the Feb. 10 strategic update and execution on ROTCE and US Consumer integration as key catalysts and risks.

Key Decisions for Investors

• Consider initiating or adding to a position ahead of the 10 February strategic update given attractive valuation (6.9x–7.9x forward earnings, ~1.1x tNAV) and UBS’s 19% upside estimate,
• Maintain discipline around execution risk: size positions to allow for downside from the contested Best Egg outcome and require visible progress toward >13% ROTCE for 2028 before further scaling,
• Use the strategic update and quarterly EPS trajectory (2027 EPS guide ~44% above 2025) as primary catalysts for trimming or adding exposure rather than reacting to short-term share moves