Barclays Share Price is Under Siege

Summary:

Barclays share price has been under pressure in recent days as traders worry about low interest rates and coronavirus related problems. Is it a buy still?

Barclays share price (BARC) share price is little changed today. The shares are trading at 108p, which is slightly below last week’s high of 113p, when it formed a shooting star pattern. Other banks are relatively higher, with Lloyds share price rising by 0.40% while HSBC shares are up by 0.15% while NatWest (Royal Bank of Scotland) shares are up by 0.90%.

Barclays shares have dropped by more than 40% this year and by more than 23% in the past 12 months. They have also dropped by more than 60% in the past five years. Still, they have outperformed other banks like Royal Bank of Scotland, Lloyds, HSBC, and Standard Chartered.

This underperformance has been blamed on several factors. First, interest rates have been at historic lows, which is negative for banks. Second, after the past financial crisis, banks have been under intense pressure. They have also paid billions of dollars in fines. Third, Brexit has been a thorn in the flesh for Barclays and other London-based banks.

For starters, Barclays operates two main businesses. It has its UK based operations, where it provides consumer services like Barclaycard. The UK operations consumes about £10.5 billion of tangible equity. And, in the most recent quarters, the segment has been responsible for the billions of dollars-worth of provisions.

The Barclays segment is Barclays international, which houses the high-margin investment and trading business. In the most recent quarter, revenue in this division has helped the bank offset its losses in the consumer business.

So, is Barclays share price cheap enough?

Analysts believe that Barclays share price is relatively cheap. Those at Deutsche Bank expect the bank’s stock to rise to 135p. Similarly, those at Credit Suisse, Goldman Sachs, and JP Morgan Chase have put a target of 125p, 135p, and 160p, respectively. The only investment bank pessimistic at Barclays share price is Royal Bank of Scotland, which expects the shares to drop to 110p.

Barclays stock analysts forecasts

Barclays share price forecast

Barclays share price has been under pressure in the past few weeks as evidenced by the daily chart below. After dropping to 74.36p, the stock attempted to recover and ultimately reached a high of 134p in June. Since then, the shares have dropped, being guided by the descending black trendline. At the current price, it is slightly below the 23.6% Fibonacci retracement level.

Also, it seems to be forming a descending triangle pattern, which means that the price is likely to continue falling as bears target the support at 98.88. On the flip side, a move above 112p will invalidate this trend. This price is at the intersection of the descending trend line and the highest point on August 12.