Jefferies says clarity on Barclays's returns and capital repatriation highest in 10 years

In their opinion, a 9.5% return on tangible equity by 2021, 9.0p dividend payout for 2019 (and progressive thereafter) and share buybacks carried out below 'book value' were all "underappreciated" by the market, they said.

Their forecasts now called for share buybacks of £2.5bn in 2020 and 2021, which equated to 8.0% of its market capitalisation.

They also highlighted how Barclays's operating risk now received the same treatment as peers Lloyds and RBS, so that its 13.4% common equity tier one ratio was now comparable to those two rivals'.

"Following capital clarity at Q3 (the bank now receives consistent treatment on op risk so that it's 13.4% CET1 is now comparable with the likes of LLOY and RBS) and £1.4bn PPI charge, we believe it is now realistic to model buybacks relative to a 13.5% CET1 threshold," they said.

Furthermore, the risk/reward trade-off for the shares was now favourable, with 66.0% potential upside in Jefferies 'bull' case but only 33.0% downside under its 'bear' scenario.

"Return improvement and capital repatriation are the most visible they have been in 10 years. Risk/reward is asymmetric with 78% upside in a bull case v 33% downside," the analysts explained.

"Our 244p price target is derived using a Gordon Growth model and we reduce our [cost of equity] estimate to 11% from 12%."