Barclays share price popped by over 2.7% on Wednesday after the company published strong financial results and announced a surprise share buyback. BARC stock was trading at 375p, up from this month’s low of 353p.
Barclays earnings and buybacks
BARC stock price jumped as the company continued doing well in the third quarter, helped by the robust investment banking division, which benefited from the return of deal-making. The company also boosted its forward guidance.
It income jumped to £7.2 billion, while it profit before tax jumped to £2.1 billion. It has made a PBT of £7.3 billion through the year, and the management expects the growth to continue in the coming years.
Barclays UK’s income rose by 16%, partly because of its acquisition of Tesco Bank and a structural hedge. Its corporate bank income was up by 17%, while its investment banking division rose by 8%.
Barclays US Consumer Bank rose by 19%, in part because of its acquisition of the General Motors co-branded cards portfolio.
Still, the results had some blemish. One of them is the motor insurance issue in which it has boosted its provision from £90 million to £325 million. Also, its costs continued rising in the last quarter as it continued integrating its operation.
The company has benefited from the ongoing resurgence of mergers and acquisitions in Europe and the United States. M&A deals worth over $1 trillion have been announced in the past few months, leading to a windfall to advisors.
Barclays share price jumped after the company brought forward its £500 million share buyback as its common equity tier 1 (CET) ratio rose to 14.1%. It also plans to have quarterly share buyback.
Share repurchase help to boost a company’s earnings per share (EPS) by reducing the number of outstanding shares. In Barclays case, its outstanding shares have reduced to 14.16 billion from 17.2 billion in 2021. The CEO said:
“Our tangible net asset value (TNAV) per share has grown to 392p, and our common equity tier 1 (CET1) ratio now stands at 14.1%. Consequently, we have decided to bring forward a portion of our full-year distribution plans, with a £500m share buyback announced today.”
Barclays is set to benefit from the tailwinds of higher interest rates in the UK, where inflation rate held steady. It will also benefit from the investment banking division as M&A and debt continues rising.
Barclays share price analysis
BARC stock chart | Source: TradingView
The daily chart shows that the BARC stock price popped after it released its financial results. This rebound happened after it formed a double-bottom pattern at 352p, where it failed to move below since September.
Barclays shares have remained above the 50-day and 100-day Exponential Moving Averages (EMA) and are now approaching the important resistance level at 390p. Its top oscillators are moving upwards.
Therefore, the stock will likely continue rising as bulls target the neckline at 390p. A move above that level will point to more gains, potentially to the psychological level at 400p. The bullish Barclays stock price forecast will become invalid if it moves below the support at 352p.
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