Alvaro Serrano, an analyst from Morgan Stanley, maintained the Buy rating on Barclays. The associated price target remains the same with p455.00.
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Alvaro Serrano has given his Buy rating due to a combination of factors surrounding Barclays’ strategic acquisition of Best Egg. The acquisition is intended to enhance Barclays’ scale in the US market and diversify its consumer lending portfolio beyond credit cards. This move is expected to be accretive to the bank’s return on tangible equity (ROTE) by 2027, aligning with its medium-term financial targets.
Moreover, Best Egg’s business model, which focuses on originating and distributing loans, complements Barclays’ existing operations. The acquisition is structured to be capital-efficient, consuming 16 basis points of CET1, while the disposal of the AA portfolio is anticipated to generate 22 basis points. This strategic alignment supports Barclays’ broader objectives for its US consumer division, including achieving a 15% ROTE target and expanding its managed receivables and net interest margin (NIM).
In another report released on October 23, Bank of America Securities also reiterated a Buy rating on the stock with a p450.00 price target.