BCS - Barclays: Well On Track To Deliver On The Triple-Digit Upside

2024-05-20 00:32:35 ET

Summary

• Barclays delivered a solid set of Q1 results, generating £7.0 billion in revenues, and £2.3 billion in pre-tax profits after impairment.
• Together with Q1 results, Barclays also shared a corporate strategy update and guided for a ROTE of >10% in 2024 and <12% in 2025.
• If ROTE guidance is correct, then BCS shares are undoubtedly cheap at about 0.5 P/B, and the stock may deserve a re-rating.
• The thesis of a cheap valuation is further underscored by Barclays' ambition to return about $12.5 billion of capital to investors over the next 3 years.
• I reiterate a "Strong Buy" rating for BCS shares, while I raise my base case target price to $29.5.

About a year ago, in May 2023, I argued that Barclays ( BCS ) (BCLYF) stock is deeply undervalued, and I projected a "triple-digit upside opportunity". Since the argument was made, Barclays has returned about 43% total equity return to investors, including dividend and buybacks, and today I am confident to reiterate my "Buy" thesis. Pointing to Barclay's recently announced Q1 results, I highlight that the Bank reported £6.95 billion of revenues and £2.3 billion of pre-tax profits, both metrics higher YoY and well ahead of consensus....

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