Find the latest Barclays share price predictions here

Since the beginning of the year it has been Barclays (LSE:BARC) The share price has risen from £1.55 to £2.42, making the stock one of the best FTSE 100The best performers of 2024. But what happens next?

The average price target of analysts is around 13.5% above the current share price. And there are some clear signs that things could be improving for the bank.

Analysts’ expectations

The average price target for Barclays shares is £2.75, suggesting optimism about the stock. However, there are a number of forecasts and not all of them are so positive.

The highest estimate I can find is £3.30, which is 36% higher than the current share price. However, the lowest amount is £2, which is a drop of about 17%.

This is a good example of why I wouldn’t be willing to buy Barclays shares based on analyst opinions alone. There are pretty big differences of opinion and it’s hard to know who to believe.

Predicting the next 12 months is clearly a challenge. However, investors may get some ideas by looking at what’s going on elsewhere in the banking sector.

A diversified bank

Barclays operates a significant investment banking division as well as a retail lending division. This way it’s more like it Bank of America (BoA) and Citigroup as Lloyd’s or NatWest.

Both BoA and Citigroup reported earnings this month and there were similar themes. Interest rates begin to fall, leading to lower lending margins but higher investment banking revenues.

The Bank of England has also cut interest rates. And while banks may make less money on their loans, Barclays could benefit from higher investment banking activity.

This is a sign that the company’s share price could perform well over the next 12 months – particularly compared to other UK banks. But there is also an important risk that investors should consider.

Evaluation

Currently, Barclays shares are trading at levels that reflect an optimistic outlook. The stock is trading at about 62% of its book value – the difference between its assets and its liabilities.

Barclays P/B ratio 2015-24

Created at TradingView

This is at the upper end of the trading range of the last decade. And it’s a sign that investors are positive about the company’s ability to generate a good return on equity in the future.

This is something investors should be wary of in the current environment. To some extent, the future growth of investment banking could already be reflected in the current share price.

This means the prospect of lower lending margins is a clear risk for investors. If things don’t go as planned, the stock’s valuation multiple could shrink, leading to a significant decline.

A stock to consider buying?

It may be harder to predict exactly what might happen at Barclays in the next 12 months than at other UK banks. This is due to the company’s unique structure.

However, from a long-term perspective, I like the combination of retail banking and investment banking. That’s why I prefer to buy shares in Barclays rather than Lloyds or NatWest.

I don’t think the share price is that attractive at the moment. But the thing about bank stocks is that sooner or later opportunities arise for patient investors like me.