Barclays sees huge upside for NatWest despite recent rally

Barclays reiterated its 'overweight' rating on the stock, which has gained 15% over the past month and 45% since the start of the year.

"Despite strong share-price performance (+45% YTD), we continue to see significant upside," Barclays said in a research note.

As a result of higher earnings and lower cost of equity, Barclays hiked its target price from 330p to 400p, a level not seen since 2015, compared with Wednesday's closing price of 317p.

"EPS momentum is turning positive, we are 10%+ ahead of [consensus], and with an exit of UK government firmly in sight, we expect an ongoing re-rating on strongly growing tangible net asset value," Barclays said.

NatWest shares were up 0.4% at 318.3p by 1551 BST.