Barclays PLC (LSE:BARC) is now the cheapest major bank in Europe on key valuation measures, according to JPMorgan, which has reiterated its Overweight rating and named the stock a top pick.
The UK lender is trading on a price-to-earnings ratio of just 6.4 times forecast 2026 earnings, falling to 5.6 times in 2027.
On a price-to-tangible-net-asset-value basis, Barclays stands at 0.7 times for 2026 and 0.6 times for 2027. JPMorgan described these levels as unjustified, particularly with the bank on track to deliver a return on tangible equity (ROTE) above 12% by 2026.
Investor concerns about Barclays’ exposure to the United States, which accounts for around 32% of group revenues via its investment bank and consumer lending units, are overstated, the broker said.
While US cards remain a challenge, JPMorgan only values that business at five times earnings due to its lower expected returns and sees it as sub-scale, representing just 8% of group profit before tax.
Even stripping out the US cards operation entirely, Barclays still screens attractively at 7.0 times earnings and 0.74 times tangible book value for a 2026 ROTE of 11.4%.
That compares favourably with European peers, which trade on average at 8.5 times forward earnings.
JPMorgan also pointed to ongoing consensus earnings upgrades and strong second-quarter momentum in Barclays' markets-facing businesses.
It expects the investment bank to remain a key driver of growth in a volatile environment, and argues the market has been too negative on this side of the business.
Despite sector outperformance from other investment bank-focused lenders in Europe, Barclays has lagged. JPMorgan believes this disconnect creates a compelling entry point and sees scope for a re-rating as earnings progress continues. The bank has a 400p price target on the shares.
The stock is currently changing hands for 325p, up 0.8% on the day.