Is the Barclays share price cheap enough ahead of earnings?
Barclays (LON: BARC) share price moved sideways on Monday morning as investors refocused on the company’s upcoming earnings. The shares are trading at 157p, which is slightly below last week’s high of 160p. This price is about 8.7% above the lowest level this month.
Barclays earnings ahead
Barclays is one of the biggest banks globally with a market cap of over $30 billion. The company has operations in the UK, US, and other markets around the world. It operates in three key segments: corporate and investment bank, consumer, cards, and payments, and Barclays UK.
In the first quarter, the company’s corporate and investment bank revenue rose by 10%, helped by global markets. Its investment banking fees and corporate revenues decline by 25% and 1%, respectively. Its consumer, cards, and payments revenue rose by 10% as interest rates started rising.
Finally, its UK business rose by 5%. In the statement, the firm said that its total costs will be about 15 billion this year.
The Barclays share price will be in the spotlight this week as the company publishes its quarterly results. Analysts expect that the company’s revenue will fall from $8.10 billion in Q1 to over $7.45 billion in Q2.
Barclays is expected to benefit substantially from the rising interest rates in the US and UK. Higher rates will lead to more interest income. The Federal Reserve has hiked interest rates by 150 basis points while the Bank of England has hiked in all its meetings this year.
It will also benefit from its trading operations just like Goldman Sachs did. Barclays is well-known for the quality of its traders.
On the other hand, the biggest challenge for Barclays will be its investment banking division that is expected to show some significant weakness. The volume of deal-making has had its biggest decline in the past few months.
Barclays will also be hit by a slowdown in consumer spending and loan growth because of the rising interest rates. Like JP Morgan, it will also report an increase in delinquencies.
Barclays share price forecast
The four-hour chart shows that Barclays share price made a bullish break-out earlier this month. It managed to move above the upper side of the descending channel that is shown in blue.
The stock has moved slightly above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) is pointing downwards.
Therefore, the stock will likely pull back and retest the upper side of the descending channel and then resume the upward trend after earnings. The next key catalyst for the stock is at 170p.
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