Barclays (LON:BARC) remains the preferred pick of Investec, which this morning reiterated its ‘buy’ advice while raising its price target to 285 pence a share from 260 pence.
Even though the stock has rallied 79% in the past five months it still trades on a similar rating to loss-making Royal Bank of Scotland (LON:RBS) and a “peculiar discount” to Lloyds (LON:LLOY), said analyst Ian Gordon.
The current valuation also ignores the solidity of the company’s investment banking arm Barcap and the “vast improvements” in the cost-to-income ratio, which have been achieved without a major loss of headcount, he added.
Gordon also previews company’s strategy day, scheduled for February 13, at which new chief executive Anthony Jenkins will outline his vision for the bank.
“We are frequently told that we are wrong to have quite modest expectations for the strategy day,” the Investec analyst said.
“That is not to say we expect to be disappointed – far from it – but after looking through ‘presentational issues’ we don’t actually expect a material change of path from that courageously embarked upon by former CEO Bob Diamond.
“The key difference is that many failed to credit Bob with the process he had begun and which Anthony Jenkins ably continues.
“With regard to Barcap, what has been accomplished over the past two years is further consolidation of market share gains, with, perhaps more importantly, a meaningful improvement in the shareholder economics as costs have come out of the business.”
At 10.30am, Barclays was one of the FTSE 100’s top movers, posting a rise of 10.49 pence to 272.89 pence.