Investing.com -- Barclays has identified its preferred Spanish banking stocks ahead of third-quarter earnings reports, highlighting two lenders expected to deliver strong performance despite varying near-term challenges.
The broker's analysis focuses on earnings growth potential, profitability improvements and shareholder returns as key differentiators in the sector.
1. Banco Santander (BME:SAN)-- With an Overweight rating and price target of €14.50, Barclays names Santander as its top pick among Spanish banks, citing the strongest combination of earnings growth, improving profitability and shareholder distributions.
The bank benefits from resilient operating momentum across its key markets in Spain, the United States, Chile and Mexico.
Barclays forecasts attributable profit, before additional Tier 1 capital costs, of €16.3 billion in 2026, €18.2 billion in 2027 and €21.2 billion in 2028. Its 2028 forecast stands 7% above Bloomberg consensus estimates.
The broker expects adjusted return on tangible equity to reach around 19% in 2027 and 21% in 2028, while higher-than-planned interest rates could provide additional earnings support.
Barclays raised its 2026-2028 estimates by about 5% on average, partly reflecting the acquisition of Webster Financial's parent company, WBS.
2. CaixaBank SA (BME:CABK)-- Barclays assigns an Overweight rating and a price target of €13.60. The bank anticipates resilient earnings and stronger-than-anticipated net interest income at CaixaBank, supported by loan repricing and customer spreads.
However, the broker identifies capital strength and buyback expectations as key risks to the stock's reaction.
Barclays estimates a roughly 10-basis-point capital headwind from higher sovereign bond yields in the third quarter and sees limited excess capital above the bank's 12.5% target, potentially delaying a buyback announcement.
Despite these near-term concerns, Barclays said weakness in the shares could provide an opportunity to add exposure, given its constructive view of the bank's fundamentals.
Original Article
Barclays Names Top Spanish Banks Ahead of Third-Quarter Results
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