Barclays share price is flying, but a pullback could happen
Barclays (LON: BARC) share price has risen for three straight weeks and is now hovering near its highest point since April 2010. It has soared by more than 255% from its lowest point in 2020.
Bank corporate earnings
Barclays is in the spotlight this week as investors focus on the ongoing bank earnings season. On Monday, Goldman Sachs reported strong earnings, helped by its trading business. Its quarterly profits rose by 150% to $3 billion.
In a statement, David Solomon, the bank’s CEO, said that the bank was seeing momentum in the capital markets division. He expects that the merger and acquisition (M&A) division was seeing some momentum.
Other US banks have published strong financial results. JP Morgan, Citigroup, and Wells Fargo had a strong increase in revenue. For example, JPMorgan’s revenue rose by 20% to $50.99 billion in the second quarter, helped by its investment banking division.
These results are important for Barclays, a company that has a sizable investment banking operations. As such, investors are hopeful that the company will also publish strong financial results on August 1st.
The most recent analysts’ consensus is that its total income for the year will be £25.76 billion followed by £27.29 billion in 2025 and £28.6 billion in the next two years.
Its profit after tax is expected to come in at £5.56 billion followed by £6.45 billion and £7.1 billion in the next two years.
Barclays is implementing a turnaround
The performance of the Barclays share price is a sign that investors are happy about the ongoing turnaround after years of underperformance.
As part of this turnaround, the company decided to offload its US credit card debt to Blackstone for an undisclosed sum. The division had over $32 billion in receivables by the end of the year.
At the same time, the CEO has announced a plan to grow its revenues in the next few years even if central banks start cutting interest rates.
Further, the company announced a plan to return £10 billion in cash to investors in the next few years. It will do that by a combination of dividends and share buybacks. The bank hopes that these returns will help to boost its valuation.
The company has also announced moves to grow its UK business. Earlier this year, it acquired Tesco Bank’s retail banking division in a £600 million deal. Just last year, it acquired Kensington Mortgages in a bid to grow its British business.
Barclays has also announced layoffs to save costs. It laid off 5,000 workers in 2023 and is working to save £1 billion by cutting 2,000 jobs.
As part of CEO C. S. Venkatakrishnan’s plan, the bank has decided to retain its troubled investment banking division. He believes that this division will benefit as transatlantic deals continue.
Looking ahead, the next key catalyst for the Barclays share price will be its earnings and the Bank of England’s decision.
Barclays share price forecast
The weekly chart shows that the BARC stock price has done well in the past few months. It recently rose above the key resistance point at 200p, near the neckline of the inverse head and shoulders pattern.
The stock formed a golden cross pattern as the 200-day and 50-day Exponential Moving Averages (EMA) crossed each other. At the same time, the Relative Strength Index (RSI) has moved to the overbought point.
The MACD indicator moved above the neutral point. Therefore, the stock will likely pull back ahead of earnings and resume its bullish trend. If this happens, it will drop to 200p and then bounce back.
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