While Barclays (LON:BARC) has followed FTSE 100 peers Lloyds Banking Group (LON:LLOY) and Royal Bank of Scotland Group (LON:RBS) in hiking its provision for payment protection insurance (PPI) claims, Shore Capital reckons that the bank’s share price has further to go, Citywire reports. The comments came after Barclays disclosed yesterday that it had also seen a spike in claims ahead of a regulatory deadline at the end of last month.
Barclays’ share price surged in the previous session, gaining 4.90 percent to close at 147.68p, outperforming the broader UK market, with the benchmark FTSE 100 index ending trading 0.44 percent higher at 7,267.95 points. This morning, the lender’s shares have built on yesterday’s gains in early trade, having climbed 0.79 percent to 148.85p as of 08:03 BST, as compared with a 0.49-percent rise in the Footsie.
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Shore Capital upbeat on Barclays
Shore Capital reaffirmed Barclays as a ‘buy’ yesterday, and a ‘fair value’ price of 285p on the stock yesterday following the group’s move to lift its PPI provisions by an additional charge of between £1.2 billion and £1.6 billion. Citywire quoted the broker’s analyst Gary Greenwood as commenting that the fair value price took into account a “10-percent haircut for legacy litigation and conduct issues which is equivalent to £4.6 billion – or 27p per share”.
“This should provide some offset to any reduction in our fair value caused by changing the share count to reflect the removal of share buybacks which would have been highly value accretive at the current share price,” the analyst pointed out.
Other analysts on blue-chip lender
Jefferies, which is bullish on the FTSE 100 lender with a ‘buy’ rating, lowered its target on the Barclays share price from 280p to 209p yesterday. According to MarketBeat, the company currently has a consensus ‘buy’ rating and an average valuation of 197.23p.