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Barclays (NYSE: BCS) Jumps after Recent 50% Fall

Jan 26 2009

Investor's were looking for writedowns on bad assets and Barclays PLC (NYSE: BCS) gave them what they were looking for. And investor's bought the shares in abundance today running them higher 61%. The shares had fallen near 50% in the past 10 days on fears that losses would widen and a government takeover as eminent. What really shocked everyone was the amount of profit the bank is looking to report even after massive writedowns of $11.3 billion. The bank now feels it will earn $7.3 billion for the year.

By Steve Patterson

The stock has fallen 90% over the past 52 weeks and along with most financial stocks is beaten and not expected to move much higher in the near term. The company president admits being victim of the current credit crisis but applauds the bank's ability to still make a sizable profit. The profit to be reported is almost more than the company is currently worth with a market cap of only $8.12 billion.

Analysts Increase Estimates

Analysts raised their expectation this week from 95 cents a share to $1.56 a share for the current year and also raised their estimates for 2009. They are now looking for $1.25 for next year.

Options Action

There was some interest in the front month options at Call prices $5 and $7.5 a share although overall not too many investor's participate in the options trading of Barclays. I would not be a buyer of Calls or Puts due to the limited liquidity in the contracts.

The Trade

The stock was flat all day today after the initial 60% higher open. I think you could sell the stock short if it opens within a 5% range of today's close and hold the position until the company announces their earnings on the 17th of February. There shouldn't be any additional news leading to a drifting lower of the stock price.

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