Macquarie remains bearish on Barclays (LON:BARC), flagging capital headwinds at the blue-chip lender. The downbeat comments come ahead of the FTSE 100 group’s half-year results later this month.
Barclays’ share price meanwhile has gained ground in London in today’s session, having added 1.64 percent to 207.55p as of 14:29 BST, outperforming the broader UK market, with the benchmark FTSE 100 index having fallen into the red and currently standing 0.52 percent lower at 7,329.52 points. The group’s shares have added a little over 57 percent to their value over the past year, but are down by some seven percent in the year-to-date.
Macquarie reiterated its ‘underperform’ rating on Barclays today, trimming its price target on the shares from 185p to 180p. Sharecast quoted the analysts as saying that management’s front-loading of expenses, particularly those related to ring-fencing its UK bank, was set to combine with softer revenues at its investment banking arm during the second quarter, weighing on its return on capital.
The broker further identified several headwinds which would stymie the lender’s efforts to strengthen its capital buffers, including litigation costs related to residential mortgage-backed securities, payment protection insurance claims and Qatar likely in excess of £2.5 billion.
Macquarie cut its estimate for Barclays’ second-quarter return on tangible equity from 7.6 percent to 6.5 percent, meaning that less resources would be available to increase its common equity Tier 1 ratio.
The 21 analysts offering 12-month price targets for Barclays for the Financial Times have a median target of 230.00p, with a high estimate of 265.00p and a low estimate of 180.00p. As of June 30, the consensus forecast amongst 25 polled investment analysts covering the blue-chip group advises investors to hold their position in the company. Barclays is scheduled to update investors on its interim performance on July 28.