How to Trade Barclays 35% Surge Amid Positive Earnings
Banking giant Barclays posted an impressive full-year 2021 result showing annual profits reached record highs.
While there are some risks to UK banking stocks from the current geopolitical situation, the bank is well-diversified and has become a stock to watch among investors.
Learn more about the stock further below.
|Symbol for Invest.MT5 Account:
|Date of Idea:
|16 March 2022
|1 - 12 months
|Position Size for Invest.MT5 Account:
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Why Trade the Barclays Share Price?
Barclays is considered to be one of the most well-diversified banks in the UK with income streams from retail banking, investment banking and international payment systems, among others. However, it’s the latest earnings report and full-year results that are most interesting.
Full-Year Net Profit Quadruples from Record Investment Banking Fees
Full-year net profits at Barclays in 2021 came in at £6.38 billion which was well ahead of analyst expectations of £5.75 billion. This figure is much higher than the £1.53 billion net profit reported in 2020.
Furthermore, net income for shareholders came in at £1.12 billion which also beat analyst forecasts of £756.5 million. These results have impressed analysts as the bank had a rough start to 2021 with long-time CEO Jes Staley resigning.
Most of the bank’s income came from a significant boost in the group’s corporate investment banking division which recorded record fees last year.
Rising Interest Rates in the UK Could Add a Tailwind to the Stock
With inflation at record highs in the UK, it is widely expected the Bank of England will continue to increase interest rates this year. One way banks make a profit is to charge consumers and businesses a higher rate on loans than they do on deposits.
When interest rates rise, it can sometimes lead to greater profits for banks as they have the option to increase their lending rates. When the Bank of England increased interest rates at the beginning of February, the Barclays share price jumped 3.2% while other banking stocks also rose. The FTSE 350 Banks Index also rose to its highest level since 2020.
What are the Analysts’ Barclays Share Price Forecast?
According to analysts polled by MarketBeat.com, there are now more ‘buy’ ratings on the stock than ‘hold’ or ‘sell.’ Of the ten analysts polled providing a 12-month forecast, the highest price target is GBX 330.00, the lowest price target is GBX 205.00 and the average price target is GBX 255.75.
Source: MarketBeat, 15 March 2022
An Example Trading Idea for the Barclays Share Price
An example trading idea for the Barclays (BARC) share price could be as follows:
- Buy the stock on a break above GBX 186.00.
- Target the median analyst price target of GBX 255.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 12 months
- A move to the median price target level would result in a more than 35% potential gain.
- Some investors may choose to target the highest analyst price target level of GBX 330.00 which would result in a more than 75% potential gain over a much longer period of time.
It’s wise to remember that the share price is unlikely to go up in a straight line and it may even go much further down before it rises. Therefore, be sure to exercise good risk management which is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade and the risks involved.
How to Buy Barclays Shares in 4 Steps
With Admirals, you can buy shares in UK companies like Barclays with a low commission of just 0.1% of the trade value and a low minimum commission of just GBP 1.0.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for Barclays (BARC) at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance.
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Do You See the Barclays Share Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance that Barclays share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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