Is the Barclays share price too cheap at its 52-week low?

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The Barclays (LON: BARC) share price is one of the worst banking stocks in the FTSE 100 this year. The stock has dropped to 144.20p, which is the lowest it has been since February 2021. It has fallen by more than 32% from its year-to-date high, meaning that it is in a bear market.

Why has BARC fallen?

There are a number of reasons why Barclays share price has been in a strong downward trend this year. First, unlike other UK banks like NatWest and Lloyds Bank, Barclays operates in the investment banking division. While mergers and acquisitions did well in 2021, the pace has dropped substantially this year as regulatory and interest rate concerns remain.

Second, it seems like the bank is losing confidence among its biggest shareholders. In March, it was reported that Goldman Sachs executed a large bloc sale with $1.2 billion. Its client was one of the bank’s biggest shareholders.

Further, the stock has retreated because of its minimal exposure to Russia and a trading error that cost it $590 million. The loss was based on two exchange-traded notes (ETNs) related to crude oil and volatility. 

Still, there are several reasons why analysts believe that Barclays share price could recover this year. First, the slowdown in its investment banking division will likely be offset by the performance of other businesses. For example, it has one of the best trading desks and it has a large balance sheet that will benefit as interest rates rise.

Second, the company is still on track to boost its shareholder returns. In its most recent statement, the firm said that it intends to boost its dividend and share repurchases. In 2021, it returned funds worth 2.5 billion pounds to investors.

Further, Barclays is an undervalued bank that has a strong balance sheet. It has a CET1 ratio of 15.1%, which is significantly higher than what it is required.

Barclays share price forecast

The BARC share price has been in a strong downward trend in the past few months. Along the way, the stock moved below the key support level at 151.66p, which was the lowest level in July 2021. It has moved below the 25-day and 50-day moving averages while oscillators are pointing downwards.

Therefore, while Barclays is a good and undervalued stock, the bearish momentum will likely persist for now. In the long term, these declines will form exciting entry points.

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