ShoreCap stays at 'buy' on Barclays despite over-issuance of structured products

28th Mar 2022 11:46

(Sharecast News) - ShoreCap analysts stood by their 'buy' recommendation for shares of Barclays even after the lender announced that it would book a massive financial charge due to a regulatory breach.

"While this announcement is very unfortunate in its nature, and yet result in further fines and penalties, the overall financial impact is manageable," they said.

"With 74% upside to our revised fair value, we reiterate our BUY recommendation."

On Monday, Barclays said that its investment banking arm had over-issued several billions dollars-worth of structured products more than it was permitted to under its shelf registration with US regulators.

Hence it expected to incur in a £450m net of tax and would have to postpone the £1.0bn share buyback programme unveiled in February until the second quarter, although no other impact was anticipated.

The broker however didn´t concur, revising down its forecasts for the share buybacks that Barclays was expected to propose in each of the financial years 2022-23 from £1.5bn to £1.0bn.

It also cut its estimate for Barclays's fiscal year 2022 earnings per share by 11% to 22.2p and its fair value estimate from 295.0p to 290.0p.