(Reuters) - Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz) may need to write down 1.5 billion pounds more over the next 18 months, analysts at Goldman Sachs said adding the British bank has little room to absorb further material losses without the dividend potentially being cut or paid in shares.
Another brokerage, Cazenove, downgraded Barclays to "in-line" from "outperform," citing share price outperformance, and said though the bank had performed well given the disruption in financial markets, it still faces a weak economic outlook and lower balance-sheet gearing.
Goldman Sachs also said it remained concerned about the bank's capital position.
Barclays' interim results were disappointing as the weak underlying performance, excluding Barclays Capital revenue, were only saved by a strong performance on costs, Goldman Sachs said.
Last week, Barclays reported a 33 percent drop in first-half profits after taking a 2 billion pound writedown on the value of risky assets, and said challenging market conditions are likely to last through 2009.
On Barclays' credit market exposures, there is the potential for up to 4.6 billion pounds of further write-downs, Goldman added.
It raised its price target on the stock to 340 pence from 320, and reiterated its "sell" rating.
Cazenove, however, said the British bank's first-half results were less pronounced than at many competitors, and write-downs taken by Barclays were broadly consistent with the range of figures disclosed by rivals.
Barclays was the best performing major European bank in the third quarter, with a share-price rise of 21 percent, Cazenove said.
"It (the shares) now trades at a premium to peers and, with no specific catalyst in view, we expect a period of share price consolidation," it said.
Shares of Barclays were trading down 2 percent at 345 pence by 1033 GMT.
(Reporting by Neha Singh in Bangalore; Editing by Vinu Pilakkott)
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