UBS has increased its price target for Barclays PLC (LSE:BARC) to 360p from 350p, maintaining a 'buy' recommendation as the UK lender continues to benefit from strong growth prospects in investment banking.
The Swiss group reiterated its preference for European investment banks, including Barclays and Deutsche Bank, over US counterparts such as Goldman Sachs and Morgan Stanley (NYSE:MS), citing a significant valuation discount that is "too wide to ignore."
Barclays trades at just 5.4 times its projected 2026 earnings, compared with 13.1 times and 15.2 times for Goldman Sachs and Morgan Stanley (NYSE:MS), respectively.
UBS believes this gap undervalues Barclays’ potential, particularly given its extensive exposure to US markets, which account for 31% of total revenue and 50–60% of its investment banking income.
As activity in the US market improves under the new administration, Barclays stands to gain disproportionately compared with its European peers.
Fixed income, currencies, and commodities (FICC) trading remains a key driver of growth. UBS forecasts FICC revenues to rise by 5% in 2025, with increased corporate hedging and trading activity amid inflation and rate uncertainties providing tailwinds.
Equities trading, expected to grow by 2%, offers further stability.
UBS also highlights Barclays’ cost management and diversified revenue streams, positioning it to navigate market volatility and capture growth opportunities.
In earlier afternoon trading the stock was flat at 256.6p.