RBC Capital Markets has given a fresh vote of confidence to Barclays PLC (LSE:BARC), raising its price target for the bank to 435p from 355p following the lender’s second quarter results.
The analysts reiterated their “outperform” recommendation, pointing to what they see as an attractive entry point, highlighting stronger-than-expected momentum in several divisions.
The upgraded price target implies a potential upside of 23% from the recent share price, according to the RBC research note dated 5 August 2025.
In a scenario analysis, RBC sees an upside case of 475p, which would amount to a 34% gain, while its downside scenario stands at 300p, reflecting a 14% drop from current levels.
What’s driving the change?
While the team reduced its full-year 2026 pre-tax profit estimate for Barclays by 1%, owing to “higher operating expenses, lower operating income and a slight increase to our cost of risk assumption”, it noted that the overall performance remained ahead of management’s guidance in some key areas.
For 2025, RBC expects a reported return on tangible equity, including additional tier 1 instruments, of 11.3%, slightly above the bank’s own target of 11%.
The analysts also flagged cumulative shareholder returns of £11.2bn over the next three years, including £4.2 billion in dividends and £7 billion of share buybacks, in line with Barclays’ stated aim of returning at least £10bn to shareholders by 2026.
Valuation and dividend outlook
RBC values Barclays using a sum-of-the-parts model, applying a cost of equity of 12.9%, down from 15.1% previously, to bring it into line with the broker’s broader coverage of UK banks.
The note shows the bank trading on a price-to-adjusted-earnings ratio of 8.0 times for 2025, falling to 6.4 times for 2026.
The dividend is expected to rise from 10.2p per share this year to 11.5p in 2026 and 12.8p in 2027, equating to a prospective yield of 2.8% this year and 3.5% in 2027.
The shares were flat at 362.35p.