JP Morgan has increased its price target for Barclays PLC (LSE:BARC) from 200p to 220p, emphasising the potential value unlocked through the bank's strategic evaluation of its Merchant Acquiring business.
This operation, integral to processing credit and debit card transactions for businesses, is reportedly worth around £1 billion.
The investment bank's analysis suggests that any transaction involving Barclays' Merchant Acquiring business would likely necessitate considerable investment in technology infrastructure.
It posits that a partnership with a US-based payments company or a private equity firm could be more advantageous than alliances with European payments consolidators, given the investment scale and strategic fit.
"Payments will remain a business of strategic importance to Banks generally, and Barclays specifically will look to retain its banking relationships with payments customers," JPM said in its note.
"Hence, long-term value creation rather than price is likely to be the ultimate objective for any deal, This approach underlines the bank's strategy of prioritising long-term value over short-term financial gains in any potential deal."
The American investment bank remains 'overweight' on Barclays, which, in afternoon trading, was treading water at 76.54p.