UPDATE: Canaccord Genuity Upgrades Barclays
In a note issued June 23, Canaccord analyst Arun Melmane upgraded Barclays (NYSE: BCS) from Hold to Buy but left the price target unchanged.
Melmane began, "The restructuring plans announced on 8th of May seem to us in both magnitude and intent the first real attempt by the current management to right size the dependence of the bank's earnings on Investment Banking/FICC."
The following bullets contain highlights from Meimane's justification for the upgrade:
- Reallocation of capital to higher return-on-risk-weighted-assets entities, such as Barcap and Africa
- Expected dividend pay-out ratio has improved from 30 percent to 40 percent
- A "more credible" deleverage in the way of a larger non-core unit "ring fenced for runoff"
Despite the upgrade, Melmane's earnings estimates remain below consensus based on skepticism that the company will not be able to cut the underlying cost base to the targeted amount.
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