ShoreCap stays at 'buy' on Barclays, says consensus 'still too pessimistic'

(Sharecast News) - The consensus for Barclays remains "too pessimistic", analysts at ShoreCap said as they reiterated their 'buy' recommendation for the shares.
On the back of heightened economic uncertainty in the UK and lower interest rate expectations, Barclays's managment said it believed it would now be more difficult to reach their target for a return on tangible equity of greater than 10.0% in 2020.

"While this appears disappointing, it needs to be put into the context of consensus estimates and a share price that are already implying a much worse outcome," analysts at the broker said.

The lender's target for a full-year RoTE if greater than 9.0% did look "achievable" they said, adding that it was ahead of the consensus forecast for 8.3%.

And as regards the target for an RoTE in excess of more than 10.0% in 2020, while management was now a little bit more cautious, the consensus was already anticipating a return of just 8.4%.

Furthermore, "the shares, trading on 0.6 times their tangible net asset value are arguably discounting something even worse."

The analysts also marked up their estimate for Barclays's earnings per share in 2019 by 4.0%, but kept their 'fair value' estimate for the stock at 250.0p.