Goldman Sachs continues to see Barclays (LON:BARC) as a ‘sell,’ pointing to two challenges for the company. The analysts also remain bearish on FTSE 100 peer Lloyds Banking Group (LON:LLOY).
Barclays’ share price rose in the previous session, adding 1.01 percent to close at 200.60p, outperforming the broader UK market, with the benchmark FTSE 100 index adding 0.63 percent to close at 7,500.41 points. The group’s shares have lost more than 11 percent of their value this year, as compared with about an 8.8-percent gain in the Footsie.
Goldman remains bearish on Barclays
Goldman Sachs reiterated its ‘sell’ recommendation on Barclays yesterday, placing the lender alongside Lloyds in its ‘UK Sell Ideas’ for next year. WebFG News quoted the analysts as pointing to evidence of lower margins on mortgages and intensifying competition on deposits as reflected in the lenders’ latest third quarter financials as the main cause of their ‘bearishness’.
The analysts explained that Barclays in particular was facing two challenges, namely its lower capital position versus peers and the subdued operating trends at its investment bank.
“Barclays’ current CET1 ratio of 13.1 percent (3Q17) includes most of the benefit from the Africa disposal, but no impact from potential settlement costs [with the US Department of Justice],” the analysts pointed out, as quoted by the newswire, adding that they saw “no meaningful change to our previous shortfall range of c.£2-8bn for Barclays”.
Other analysts on FTSE 100 lender
Jefferies, which sees Barclays as a ‘neutral,’ set a price target of 205p on the shares last week. According to MarketBeat, the FTSE 100 lender currently has a consensus ‘hold’ rating and an average price target of 206p.
Barclays is currently awaiting the outcome of a UK probe into its chief executive Jes Staley and his attempts to uncover a whistleblower. The investigators at the Financial Conduct Authority, however, are thought to have pushed back their decision a second time.