Here are three reasons why Barclays’ share price could slump in May.

1. War worries

Barclays’ recent plunge reflects the start of the Iran war. The consequences on inflation and economic growth could be significant, and are still being calculated. However, the conflict is likely to be a significant net negative for retail banks.

High street rival Lloyds has booked a £151m impairment charge due to the “[deteriorating] economic outlook as a result of the Middle East conflict“, it said last week (29 April). It predicted the UK economy will grow just 0.5% in 2026, worse than the 0.8% the International Monetary Fund (IMF) tipped two weeks earlier.

In this climate, Barclays could endure a sharp rise in bad loans. It might also see loan demand slow to a crawl or even reverse, putting profits under further strain. Large impairment charges like those taken by Lloyds could be possible in the months ahead.

The good news is Barclays has considerable exposure to the US to offset trouble at home. And growth there is accelerating, to 2% in Q1 versus 0.5% during Q4 last year. But can US GDP keep up the pace as the Iran war rolls on? I’m not so sure.

2. Investment bank struggles

Unlike Lloyds, Barclays has a sizeable investment bank it can fall back on if its retail operations struggle. The high-margin fees it receives can support income and cash flows. Trading activity can also pick up during periods of financial market volatility.

However, conditions here overall could deteriorate as the broader economy struggles. Risks include:

• Reduced trading volumes as risk aversion grows.
• Higher default risk in corporate lending.
• Stock market weakness, reducing assets under management (AUM) and with them fee income.
• Slowing merger and acquisition (M&A) activity and fewer IPOs, further damaging advisory fees.

3. Too expensive?

In my view, there’s a huge disconnect between the scale of these threats and Barclays’ current valuation. At 431.5p, the bank’s price-to-earnings (P/E) ratio is 9 times, above the long-term average of roughly 7. And this raises the chances of a price correction.

That P/E’s not outrageously high, but with risks rising, any premium could be increasingly hard to justify. And especially when you throw in other massive dangers facing the bank today, like the growing popularity of challenger banks and a prolonged housing market downturn.

On the plus side, rising inflation could offer some upside for the company. Why? When interest rates are hiked to control price rises, banks’ net interest margins (NIMs) receive a big boost. But on balance, things could still get a lot tougher for Barclays and its shares. I’d rather find other FTSE 100 shares to buy.

The post 3 reasons why Barclays shares could crash in May! appeared first on The Twelfth Magpie.

Indeed, the underlying business continues to generate solid earnings, maintain a strong capital position, and return substantial cash to shareholders. And that disconnect points to a potentially excellent opportunity for long-term investors to benefit if the price gravitates towards its ‘fair value’.

So, what sort of potential gains are we looking at here?

How big is the price-to-value gap?

Asset prices, including shares, tend to move back towards a company’s ‘fair value’ over time. And to estimate fair value, discounted cash flow (DCF) analysis projects future cash flows and discounts them back to today. The more uncertain those projections are, the higher the return investors demand, increasing the discount rate.

DCF models vary depending on the assumptions used by the analyst. Using my own framework — including an 8.3% discount rate — Barclays shares appear 54% undervalued at their present price of £4.18. That implies a fair value of £9.09, more than twice the current level.

So, if the price continues to converge towards fair value, this could be a tremendous buying opportunity if those DCF assumptions hold good.

Supported by strong fundamentals?

Q1 2026’s results, released on 28 April, showed group income up 6% year on year to £8.2bn. It reflected the benefit of higher net interest income, supported by lending growth across the UK and US businesses and structural hedge gains. The hedge is a long‑dated interest‑rate portfolio that smooths earnings when rates move, and it continues to support income even as margins stabilise.

Profit before tax increased 3% to £2.8bn, highlighting the resilience of the bank’s diversified model, despite a £200m impairment in the Investment Bank. Elsewhere in its fee-based operations, Markets’ income grew 6% to £2.832bn, with Equities up 16%. This underlined the ongoing benefit of the bank’s recent shift toward fee-based rather than income-based business.

That said, its interest-based US Consumer Bank division also saw its income rise — by 14% to £983m. It reflected strong business growth and a higher net interest margin of 12.76%.

Together, these drivers point to a business with firm earnings momentum and improving operational efficiency. A risk here is that a period of weaker markets could still affect client activity and reduce fee income across the Investment Bank. Another is that credit conditions could tighten further, which may lead to higher impairments.

Nevertheless, analysts forecast that Barclays’ earnings will increase by an annual average of 8.6% a year to end-2028 at minimum. And this is what ultimately catalyses share price gains over the long run.

My investment view

I already have holdings in HSBC and NatWest, so adding another bank would unsettle my portfolio’s risk/reward balance. Instead, I am looking at similarly undervalued high-performance stocks in other sectors.

However, for those without this conundrum, Barclays’ combination of a wide price‑to‑value gap, firm earnings momentum, and consistent capital returns leaves it looking attractively positioned and one for long‑term investors to consider.

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Most of this occurred when the war in Iran started. However, the firm’s shares have enjoyed a decent rebound since.

In fact, its shares are up 14.9% since then. This hasn’t offset the decline in its shares since the start of the year, but it’s still nice for some of the company’s shareholders to recoup some of their losses.

However, if an investor miraculously timed the market perfectly and bought £10,000 worth of shares on 20 March, they would have a delightful profit of £1,486.

But it’s no longer 20 March, and many of you reading this will be wondering whether Barclays shares are still worth considering today.

Diversified or risky?

On the one hand, the great thing about Barclays’ business is how diversified it is. Unlike most other major UK banks, it has a very strong investment banking division. This accounted for almost half of its first-quarter income, with £4bn of turnover compared to the overall turnover of £8.2bn.

Moreover, this division also saw a good 4% rise from the same period in the prior year. Because of its diversified segments, the company is less impacted by interest rate changes than some other banks. So, if interest rates are falling, Barclays can rely more on its investment banking division.

On the other hand, though, diversification may be the bank’s weak point in current circumstances.

Investment banking is a cyclical business and is heavily influenced by global macroeconomic conditions. Speaking of these, they aren’t looking great right now with rising oil prices resulting from the war in Iran.

And while the Bank of England chose to hold interest rates last week (30 April), they warned that rate rises were likely to combat the inflation arising from higher oil prices.

Therefore, not being as exposed to interest rates may not be a favourable position right now. Other banks could benefit more from rising rates, as their net interest margins increase.

However, maybe Barclays shares are valued more nicely than its competitors?

Valuation

You’d think that after rising by 179.2% since the start of 2024, the firm’s shares would be a bit expensive.

You’d be wrong, though… its shares currently trade at a pretty cheap forward price-to-earnings (P/E) ratio of 8.4!

Let’s compare that to the forward P/E of some other UK banks for a second:

• HSBC: 10.9
• Lloyds: 10.1
• NatWest: 8.2
• Standard Chartered: 11.5

Looking at this, they’re all a bit more expensive than Barclays, except NatWest, which is only marginally cheaper.

Therefore, some of the risks mentioned above could already be priced in.

I also want investors to note that while the present economic environment may not be conducive for Barclays shares to thrive, over the long term, diversification could be its strength compared to other banking stocks.

As a result, today might be an attractive entry point for investors to consider buying the company’s shares.

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Long-term investors will take the dip on the chin. The Barclays share price is up 135% over five years, and 43% over 12 months. Those who don’t hold the stock, or would like to hold more, may be licking their lips. The shares could fall again next week, possibly below £4, depending on events in the Middle East. But is there any point in waiting?

Is this stock too red-hot to resist?

Barclays has been making an awfully lot of money lately. It posted a record £9.1bn pre-tax profit in 2025, up £1bn on the year before. Profits have been humming along nicely for some time, with a blip in 2023. That blip was down to a £927m restructuring charge, disappointing investment performance, and declining net interest margins as customers shifted cash into higher interest accounts. Profits are firmly in the ascendancy today.

2025 – £9.1bn

2024 – £8.1bn

2023 – £6.6bn

2022 – £7.0bn

2021 – £8.4bn

On Tuesday (April 28), Barclays reported a 3% rise in Q1 2026 profits to £2.8bn. Total income grew 6%, but higher costs and increased impairment charges worked against that. The headline issue was a £823m credit impairment charge, driven by a £228m hit from the collapse of a ‘single name’ shadow bank customer. Barclays also had to increase provisions for the motor finance mis-selling scandal by £105m, although it got off pretty lightly compared to rival Lloyds. The shares fell almost 3% on the day.

I think Barclays now looks superb value with a forward price-to-earnings ratio of just 7.7. That’s roughly in line with it’s 10-year average. Perhaps Barclays always will be cheap, measured by its P/E. I’ll be keeping a close eye on that in future. But it does look very tempting today.

Can the FTSE 100 bank benefit from current volatility?

Other banks offer bigger dividend prospects. That’s largely because Barclays plans to reward investors primarily through share buybacks. Despite that, the forward yield is a decent 3.5% for 2026, and forecast to hit 4.25% in 2027. Between 2026 and 2028, Barclays expects to return more than £15bn to shareholders, in total.

Barclays has retained its US investment banking division, and should benefit from increased trading during recent stock market volatility. It’s been expanding its Middle East operations, although geopolitical uncertainty may knock that.

Rising interest rates may work in its favour, allowing it to widen the margin between what it pays savers and charges borrowers. However, if the oil price spike drives the world into recession, it will struggle like all the banks.

I think investors have been a little hard on Barclays lately and its shares look compelling with a long-term view. Growth, income, buybacks, what’s not to like? I think it looks great value at £4.30 and is worth considering.

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The buyback’s another clear sign that management wants to reward investors and support the share price over time. The slight decrease in overall share count should help to boost the value of each individual share.

But the market has yet to react significantly.

What the buyback might mean

This latest move is part of a much bigger capital‑return plan. Barclays has already been running share buyback programmes worth up to £1.5bn in total since 2025, with all repurchased shares cancelled rather than held in treasury.

This is explicitly to reduce its share capital. In 2025 alone, it returned £3.7bn to investors through dividends and buybacks.

In theory, fewer shares mean higher earnings per share, which can support the price over the long run if profits hold up. In practice though, the share price will still jump around with the economic outlook and wider market mood.

Macro factors — like the war in Iran — could negate any positive impact from the buybacks. So where do anlysts think the share price is heading?

Looking ahead

Broker forecasts are generally constructive. Seventeen analysts following Barclays have a one‑year median price target of 541p, about 24% above a recent price of 437p. They also expect a growing dividend stream on top, with a forecast yield of 3.3% for 2026 rising to 3.97% in 2027.

Some valuation models suggest the shares still trade well below estimated fair value. However, a few brokers still give the stock a Hold rating rather than a screaming Buy. So while expectations are generally positive, they’re not euphoric.

Barclays by numbers

Recent results show why the board feels confident enough to keep handing back cash. In 2025, Barclays generated income of about £29.1bn and profit before tax of £9.1bn, lifting its return on tangible equity to 11.3%.

The common equity tier 1 (CET1) capital ratio stood at 14.3%, comfortably within its target range, even after allowing for a large buyback.

Key points for investors include:

• Total 2025 capital returns of £3.7bn, combining dividends of 8.6p per share with £2.5bn of buybacks.
• A plan to return at least £10bn between 2024 and 2026 and more than £15bn between 2026 and 2028.
• Management targets group return on tangible equity (RoTE) above 14% by 2028 if the strategy goes to plan.

On the flip side, if a market downturn sparks loan losses, profits could be hit. Regulatory changes such as Basel 3.1 also add risk, and geopolitical shocks could hurt credit quality, squeezing margins.

What does this mean for investors?

For existing shareholders, these buybacks are certainly relevant. They signal confidence, support earnings, and could ultimately help close the gap between the share price and underlying value.

For new investors, Barclays still looks like a possible contender for a long‑term portfolio – but only if you’re comfortable with bank sector ups and downs and short‑term volatility.

Still, that mix of income, buybacks and potential re‑rating are certainly attractive.

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The shares have backed off 16% since February’s highs. But we’re still looking at a 44% gain in 12 months — and 125% over five years. So what do Barclays shares look like as an investment now, after what seems like another positive set of results?

“Another solid quarter”

CEO C. S. Venkatakrishnan spoke of “double-digit returns in all our businesses“, despite impairments and a one-off charge in the quarter. In fact, his statement deserves fuller attention:

Top line income grew 6% year-on-year, driven by broad based divisional performance including in the Investment Bank, where we generated over £4bn quarterly income for the first time. The cost:income ratio improved to 56% and earnings per share (EPS) grew by 8% to 14.1p. Our capital position remains robust with a 14.1% common equity tier 1 (CET1) ratio and we are announcing a £500m buyback today.

He concluded by reiterating the board’s confidence in Barclays meeting all its financial targets. So why the muted response from investors?

Diversity and risk

Diversification usually reduces risk. But in this case, compared to other UK high street banks, it exposes Barclays to more risks in two other areas of its business. One is investment banking, which does seem to be largely behind this impressive quarter. That can be volatile, even if it can offer greater profit potential.

And there’s international risk too, which solely UK-focused banks don’t face. Then again, it’s not like Barclays’ domestic banking hit a tough spot — not with UK income up 9% in the quarter.

But, total operating expenses rose 4% year on year, which perhaps takes a bit of the edge off the positivity. And do investors fear further damage after £0.8bn in impairment charges in the quarter? I expect so. But I can still see a bright future.

Barclays share price

City brokers were solidly positive about Barclays before these results, setting a consensus price target of 530p. That’s 25% up on the price at the time of writing, and nicely above the stock’s 52-week high from earlier in the year.

We have to wait and see if there are any updates now. But if existing analyst forecasts prove accurate, I could see that target easily exceeded — eventually.

Even current-year projections put the stock on a 2026 price-to-earnings (P/E) ratio of only 8.1. And the bank just told us it expects to hit its targets. Looking out to 2028, we could see the P/E drop to just six.

Follow the cash

I think more focus on dividends might have boosted long-term confidence better — currently the forecast yield is only 2%. And I suspect we’re in for a few years of uncertainty over where Barclay’s divisional profits are going to come from. So we might see more share price weakness.

But is Barclays one to consider for long-term investors? I reckon it has to be, yes.

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Q1 results

The blue-eagle bank’s first-quarter numbers don’t shout, but they quietly impress. Profits edged up to £2.8bn, while earnings per share rose to 14.1p. Returns eased slightly year on year, but at 13.5% they remain firmly in double-digit territory.

Income grew 6% to £8.2bn, with strength across the business. The standout was the investment bank, generating more than £4bn in a single quarter for the first time. Growth in UK lending and stronger US consumer activity added support.

Costs were kept under control, with the efficiency ratio improving to 56% as savings helped offset inflation and ongoing investment.

There were some blemishes. A one-off impairment pushed credit losses higher. Even so, a strong balance sheet and a new £500m share buyback suggest management remains confident in the wider outlook.

Strong returns — but what’s really driving them?

The bigger question for me is what’s really driving Barclays’ longer-term story — and whether this quarter gives a clear answer.

On one hand, I think the investment bank is doing a lot of the heavy lifting. Breaking through £4bn of quarterly income is no small feat, and it shows Barclays can still capitalise when market activity picks up. That’s a genuine strength.

But there’s a familiar trade-off. Investment banking income is volatile, swinging with market conditions rather than steady demand. To me, that makes the earnings picture feel less predictable than it first appears.

Then there’s capital returns. I see the £500m buyback as another sign of management confidence, and a clear preference for returning cash this way. Buybacks can be appealing. They can boost earnings per shares, and they may signal the shares are undervalued.

Still, I’m not convinced it’s a clear win for investors. Buybacks depend heavily on timing and are less tangible than dividends for dependable-income-seekers. More broadly, I find myself wondering whether this is the best use of capital, or simply the easiest.

I see a bank generating solid returns and plenty of capital. But it’s still leaning on more cyclical drivers while returning cash rather than reinvesting it — and that leaves me questioning how compelling the long-term story really is.

What’s the verdict?

Barclays still sits in an awkward middle ground. It’s generating strong returns and returning cash to shareholders, but a lot of those profits are still tied to more cyclical drivers like the investment bank.

At the same time, the bank itself is flagging a more uncertain economic backdrop, with credit risk assumptions being adjusted for geopolitics and weaker growth.

I think it leaves Barclays looking less like a steady long-term compounder and more like a cyclical bank trying to smooth its profile with targets and buybacks.

It’s not unattractive — returns are strong and capital returns are clearly in focus — but I’m not convinced the shares are the most compelling opportunity to consider in the FTSE 100 right now, especially when there are other names with clearer, more predictable growth stories.

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Barclays gets battered

At their 2026 high, Barclays shares peaked at 506.4p on 4 February. That was the first time they’d breached the £5 mark since end-2007, before the global financial crisis of 2007-09 crashed banking (and other) stocks.

After a steep, swift, and sudden slide, the Barclays share price hit its 2026 intraday low of 361.35p on 23 March. At that point, the shares had lost 28.6% of their value in under two months.

By the way, my family portfolio owns Barclays stock, having paid 154.2p a share for our stake in mid-2022. And as a shareholder, I was struggling to see how the Blue Eagle bank’s stock had slumped so far in so little time. On 18 March, I wrote arguing that the bank’s shares — then 390.65p — were back in the stock market’s bargain bin.

Booming Barclays

Thus far, it seems my call was right. As I write (24 April), Barclays shares trade at 420.8p, valuing the bank at £58.1bn. This ranks the group at #13 among the elite FTSE 100 index.

Currently, the shares trade on nearly 10 times historic earnings, producing an earnings yield of 10.1%. This means that their dividend yield of 2% a year is covered a very healthy five times by trailing earnings.

As things stand, this Footsie firm’s shares no longer look cheap to me. I originally bought them for their market-beating cash yield, which has since fallen steeply as the share price climbed. Would I buy Barclays stock today? No, but I also have no intention of selling our existing holding.

That said, I expect Barclays to generate powerful profits in 2026. Thanks to this latest sharp spike in energy prices, UK inflation is rising. This leaves the Bank of England with little to no scope to lower its base rate anytime soon. This means that banks’ NIMs (net interest margins — the spreads between borrowing and savings rates) will remain high.

Furthermore, with leading positions in home loans, business lending, and credit cards, Barclays will benefit big-time from UK interest rates staying higher for longer.

What could derail this money train? Risks include a weaker property market, falling demand for credit, and rising loan losses/bad debts. These could hit revenues, earnings, and cash flows at Barclays and other British banks. Even so, I’m holding on tight and hoping for even juicier returns from our Barclays shares.

What other stocks are moving markets and making money for investors? Find out more below!

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The high end of analysts’ targets currently sits at 590p, almost bang on 40% ahead of the price early Friday (24 April). We do however, need to be aware this is just one firm’s opinion, and others differ widely. In fact, at the bottom of the range we see opinions suggesting no movement at all. And we should take them all into account.

We should never make an investing decision on just one target like this. But it can be worth examining it to see if we think it’s reasonable.

Bank of England caution

There’s also a breaking cause for concern. Bank of England deputy governor Sarah Breeden has told the BBC the BoE thinks share prices are too high and expects world stock markets to fall.

She said: “There’s a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point.” Contributing factors include the risk of a major macroeconomic shock, and very high valuations for some stocks including AI.

Why might it be a threat for Barclays? Whenever there’s a financial crunch, the banks always seem to suffer, don’t they? And Barclays, with its international and corporate banking exposure, might face more pain than others.

Investors always need to approach the stock market with the risks in mind. We’ve had stock market crashes before, and we have to expect them again. But through it all, UK shares have beaten other forms of investment hands down — over the long term, that’s for more than a century.

Barclays prospects

Forecasts suggest Barclays’ earnings per share could jump nearly 70% between 2025 and 2028. There’s not much of a dividend right now, with a yield of only 2% on the cards. But that kind of earnings growth would cover projected dividends out to 2028 by more than three times. If the analysis is right, we could see plenty of room for further cash returns.

At FY 2025 time in February, CEO CS Venkatakrishnan said: “Our aim is to secure sustainably higher returns through to 2028 and beyond, delivering Group RoTE of greater than 14% in 2028 and greater than £15bn of capital distributions to shareholders between 2026 and 2028.“

If the anticipated earnings growth comes off, Barclays’ price-to-earnings (P/E) ratio could plunge as low as six by 2028. A 40% share price rise would push it close to 8.5 — based on current prices.

Eyes peeled

Is our most optimistic broker correct to see this potential valuation as too cheap? Well, it depends on what happens in the next three years. And looking back on just the past three months, I fear that might be a lot.

I do think the main threats right now — to Barclays shares, and financial stocks in general — are economic, political and global. But on the valuations we’re seeing here, Barclays surely has to be a stock to consider for the long term. Q1 results are due on 28 April.

The post Here’s how Barclays shares could climb another 40% appeared first on The Twelfth Magpie.

Plenty of blue-chips could be ripe for a similar revival, but Barclays has momentum on its side. All the big UK banks have done well in recent years, for the same reason. Higher interest rates have allowed them to widen net interest margins, the difference between what they pay savers and charge borrowers.

At the start of the year, it looked like that benefit was set to fade, with inflation and interest rates expected to fall. The Iran war has changed that. Inflation jumped to 3.3% in March and it’s expected to climb higher. Interest rates may rise too, which will protect margins. However, it will have a negative impact elsewhere, say, by hitting demand for mortgages, or driving up loan impairments.

Can this FTSE 100 bank keep flying?

Barclays has a broader span than UK-focused banks such as Lloyds and NatWest, due to its US, investment banking and large corporate operations. That makes it potentially more rewarding in good times, but riskier in troubled ones. While recent market volatility will have boosted its trading arm, Barclays has more exposure to equity market bubbles and economic shocks, including threats in AI and private credit. I think investors need to take those risks into account too.

I hold Lloyds, and my shares have done brilliantly. I’ve been looking to supplement it with a second bank, and Barclays seemed the obvious pick, given its different focus. I baulked at the price though. An investor who got in five years ago would only have had to pay 181p per share. If they’d invested £10,000, they’d have bought 5,525 shares, ignoring trading charges. If they’d reinvested their dividends, they’d have even more today.

Today, the Barclays share price is 434p. To buy 5,525 shares now, I’d need to invest £23,978. If fact, I’d probably need to tuck away £25k, to reflect the dividends I’d missed. Which shows how brilliantly equities build wealth.

This stock still looks good value to me

When the Iran war started, Barclays shares plunged, and I wrote several articles for The Motley Fool highlighting the opportunity. Under our strict trading rules, I can’t just write about a stock then go and buy it. Which meant I missed the recent sharp rebound. While annoying, I still think the shares look good value today.

The price-to-earnings ratio is a modest 9.9%, well below today’s FTSE 100 average of just over 16. That’s above the five-year average of around 7.5 for Barclays, but still hugely tempting. This is a bank that posted an 11.3% return on tangible equity in 2025 and aims to deliver more than £15bn of capital to shareholders between 2026 and 2028, via dividends and share buybacks.

There are risks. An oil shock, spike in bad debts or private credit implosion could hit Barclays hard. If you’re thinking of gaining exposure to the UK banking sector, I still think it’s worth considering, even at today’s higher price.

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