Barclays Share Price Makes a Slow Recovery. Is it a Safe Buy?

Summary:
• Barclays share price has recovered modestly recently as UK bank stocks bounced back. The stock rose to a high of 1712p in London

Barclays share price has recovered modestly recently as UK bank stocks bounced back. The stock rose to a high of 1712p in London, which was the highest level since March. It remains about 21% below its highest point this year, meaning it has underperformed other banks like HSBC, Standard Chartered, UBS, and Natwest.

Why has Barclays underperformed?

Barclays is a relatively unique bank unlike Natwest and Lloyds. For one, it is a global company with operations in several countries around the world. It is present in the UK, US, India, China, and France among others. NatWest and Lloyds are mostly domestic banks.

Another difference is that Barclays offers a diverse number of services. It offers both retail banking and investment banking solutions. In fact, according to the Wall Street Journal, it is one of the biggest investment bank in the world.

Therefore, this diversification helps the company navigate numerous challenges. For example, during the pandemic, the strength of its investment banking helped to offset the challenges in its retail banking operations. This year, high-interest rates have helped to offset the performance of its investment banking. Most investment banks, including Goldman Sachs, have struggled as deal-making has dried.

Barclays has underperformed other banks this year. For example, it has a forward dividend yield of 2.52%, which is lower than that of NatWest, Lloyds, and Goldman Sachs. At the same time, its stock is severely undervalued. It has a price-to-book ratio of just 0.33x, which is sharply lower than that of JP Morgan’s 1.3x. 

Therefore, a key catalyst for Barclays share price is the rising interest rates and the benefits of its diversification. Also, the bank has more room to boost its dividend payouts.

Barclays share price forecast

The daily chart shows that the Barclays share price has been in a strong bullish trend in the past few weeks. It has managed to move above the 25-day and 50-day moving averages. The stock has formed an ascending triangle pattern, which is usually a bullish sign.

The awesome oscillator has moved above the neutral time. Therefore, the stock will likely keep rising a bulls target the 50% retracement level at 180p. A move below the support at 170p will invalidate the bullish view.