Barclays Stock at an Attractive Entry Point Despite Strong Performance

Barclays (LON: BARC) shares are at an “attractive entry point” for investors, according to analysts at Goldman Sachs in a recent note.

In a research note released last week, Goldman initiated coverage of Barclays with a Buy rating and a 12-month price target of 290p a share, implying a potential upside of over 25%.

Goldman's analysts believe that Barclays' shares have been undervalued despite a strong 51% rise for the year-to-date, trading at only 6 times forward earnings.

The discount, compared to historical levels and the broader European banking sector, presents a compelling opportunity for investors, said the firm.

Goldman Sachs highlighted several factors supporting its positive outlook on Barclays: the bank's forecast of strong earnings growth, its expected resilience to falling interest rates, and the potential for upside to consensus estimates.

“We forecast Barclays will grow EPS twice as fast as peers, with 16% average EPS growth over 2024-26E per our forecasts vs. a European Banks' coverage average of 8%,” said Goldman Sachs.

The analysts also believe the bank's earnings will be relatively resilient due to its UK structural hedge and the strength of its investment banking and US credit card businesses.

Additionally, Goldman Sachs says there is upside risk to consensus estimates for Barclays' earnings, as the bank's net profit forecast is 3% higher than the consensus average over the 2024-26 period.