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Deutsche Bank upgrades Barclays but Citi isn’t convinced

David Lock, Deutsche analyst, in a note, said the bank sent a strong statement of confidence with its dividend and promises of buy-backs
Barclays office
Deutsche's target is 250p but Citi's is pitched at 150p.

A pair of blue-chip analysts today had contrasting views on Barclays PLC (LON:BARC), with Deutsche Bank upgrading its target price, but, Citigroup repeated a sell recommendation.

Deutsche lifted the target price to 250p, from 234p, and repeated a ‘buy’ rating.

READ: Barclays swings to 2017 loss but shares gain on plans to restore dividend

David Lock, Deutsche analyst, in a note, said the bank sent a strong statement of confidence with its dividend and promises of buy-backs.

“Now the bank’s capital position is removed as the main market concern, the focus turns to revenues: after stabilizing in 2017, Barclays needs to deliver c.£2.5bn revenue growth over 2018-19 in order to reach its RoTE target of >9%,” Lock said.

He added that forex headwinds are a near term issue, but, there’s “cause for some optimism” including expected growth for UK and US retail banking as well as strong potential for improvement in corporate revenues.

Pouring cold water, meanwhile, Citi analyst Andrew Coombs repeated a ‘sell’ and a 150p target.

“The Barclays investment proposition depends on the credibility of the financial targets, which rely on the ability to grow revenues again (at a c4-5% CAGR), following five consecutive years of decline,” Coombes said in a note.

“We view this as challenging.”

Specifically, the analyst reckons Barclay’s investment banking business will be key and, seemingly, he doesn’t fancy Barclay’s chances.

“We believe it could take a pro-longed period of time to turn around the struggling investment bank, rather than the (quick) 2-3 year plan outlined by management,” Coombes added.

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