Barclays (LON: BARC) share price has struggled like other British banks in the past few weeks. It has slipped by almost 10 percent from its YTD high, entering a correction zone. It also remains over 22% below its highest level in 2023.
Barclays bets on acquisitionsBarclays has been a highly troubled bank lately as its investment banking division goes through a major slowdown. Along the way, some of the bank’s top investors have given up and dumped the stock. In December, Qatar’s wealth fund became the second major investor to sell the company’s shares.
Now, the company is working to grow its British business through acquisitions. Earlier this year, Barclays announced that it would acquire Tesco’s banking division in a $757 million deal. This deal will give it access to more customers and branches across the country.
There are also rumours that Barclays is about to acquire Kleinwort Hambros, Societe Generale’s private banking division. If this happens, the acquisition will help it reach more high-net-worth customers in the UK.
Barclays is also looking for ways to simplify its operations globally. As part of this trend, the company has shed over 5,000 jobs in the past few months. Some of these layoffs will likely continue this year as the company attempts to reduce its cost-income ratio to move in line with its peers.
Still, the company has ignored the idea of separating its investment banking division and its other retail and commercial divisions. Barclays believes that it has a role to play since it is the biggest investment banking company in Europe. On the positive side, there are signs that corporate dealmaking is increasing.
The management believes that the company will always be an important player in engineering transatlantic deals. The other issue is that the company, together with other British banks are seeing weak profitability as the impact of high interest rates fade.
Looking ahead, the next important Barclays news will be the company’s earnings scheduled for February 20th. The most recent results showed that the company’s income rose to £6.3 billion in the third quarter while its profit before tax (PBT) was £1.9 billion. For the first nine months, its PBT stood at £6.4 billion.
The consensus is that the company’s total income for the fourth quarter will be £5.3 billion. The full-year income is expected to come in at £25.3 billion while the profit before tax will come in at £6.6 billion. Barclays has a good track record of beating analysts’ estimates.
Barclays share price forecast
The daily chart shows that the BARC share price has been under pressure in the past few months. As it dropped, the stock moved below the 50-day and 100-day Exponential Moving Averages (EMA), signaling that bears are in control.
On the positive side, the stock has formed an inverse head and shoulders pattern, a sign that it could resume the uptrend. It remains below the slanted neckline of this pattern.
Therefore, there is a possibility that the stock will bounce back when the company publishes its financial results next week. However, like I have warned against Lloyds Bank before, I believe that there are better opportunities than British banks.
For example, investing in passive American tech ETFs like QQQ seems like a better alternative. For one, shares of the two banks remain sharply lower than their pre-GFC high. In Barclays’ case, it is 67% below its all-time high.
The post Barclays share price is being shredded: will acquisitions help? appeared first on Invezz
