Analysts have reaffirmed their 'Buy' rating on shares of Barclays after the bank surpassed expectations with its recent results.
The FTSE 100 lender reported a pre-tax profit of £8.1bn in 2024, exceeding the estimated £8.07bn, as reported by .
"We believe strong capital generation should support a higher valuation and plans to return more than £10bn over 2024-26 seem conservative," stated Peel Hunt analysts Robert Sage, Stephen Payne and Stuart Duncan.
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They further commented: "The six per cent rise in income, 24 per cent increase in profit before tax and double-digit return on tangible equity confirm that financial performance is stepping up.
"The company guided for structural hedge income to increase a further £1bn in 2025, and market conditions for the investment bank currently appear supportive, especially in the US."
Despite initial guidance remaining unchanged, they suggested the 12 per cent return on tangible equity goal seemed "increasingly realistic (if not conservative)."
Barclays shares initially dropped by as much as five per cent following the results, but quickly rebounded as analysts labelled the dip a "temporary glitch."
Peel Hunt subsequently increased its target price for the bank by 11.8 per cent to 359p, with the bank's shares trading above 300p on Tuesday morning.
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Barclays also announced a share buyback of up to £1bn during its annual results, expected to commence in the first quarter of 2025.
According to analysts, "Share buybacks remain highly accretive not only to Barclays earnings per share but also to its tangible net asset value, to a significantly greater degree than Lloyds and Natwest, and in our view the continued prioritisation of buybacks is beneficial for equity holders."
They also noted that Barclays has a "greater focus on buybacks than its two peers". The acquisition of Tesco Bank's retail banking business in November 2024 contributed to an increase in fourth-quarter income, with the lender experiencing a £0.6bn gain on the first day.
Peel Hunt analysts commented: "Barclays never has been an expensive stock."
They added that the 2024 results demonstrate the bank's progress towards its goal of achieving a return on tangible equity of over 12% in 2026, facilitated by more rational capital allocation policies and rising structural hedge contributions.