Yesterday’s Analyst’s Downgrade: Barclays PLC (ADR) (NYSE:BCS)

Barclays PLC (ADR) (NYSE:BCS) currently trades at $11.19 which is about -2.86% lower than the 52-week high of $12.05. The trading volume at ready counter moved to 3.59M shares as compared to 3.15M shares average traded volume. The stock failed to get pushed above the $11.26 barrier, the intraday high, after opening at $11.25. Analysts have a consensus target price of $9.66 in the 12-month period. Its market capitalization has now reached to $47.13B.

Barclays PLC (ADR) (NYSE:BCS) was dropped to Underweight from Equal Weight at Barclays. It has earned a consensus buy rating, according to Zacks Investment Research. No analyst has rated the stock with a sell rating, 1 has assigned a hold rating, Zero says it’s a buy and 3 have assigned a strong buy rating to the company.

Barclays PLC (ADR) (BCS) on December 31, 2016 announced that four Barclays exchange-traded notes will become subject, on January 1, 2020, to new regulations issued by the Internal Revenue Service requiring U.S. federal income tax withholding on “dividend equivalent” payments made to non-U.S. beneficial owners (“Section 871(m) withholding”). The affected exchange-traded notes (the “Covered Securities”) are:

  • The Barclays ETN+ FI Enhanced Global High Yield ETN;
  • The Barclays ETN+ Shiller CAPE™ Index ETNs;
  • The Barclays Return on Disability ETN; and
  • The Barclays Women in Leadership ETN.

The new regulations apply only to non-U.S. beneficial owners, so the tax treatment of U.S. beneficial owners of Covered Securities is generally not altered by the new regulations.

As a general matter, the new regulations take effect on January 1, 2017 and provide that “dividend equivalent” payments made to a non-U.S. beneficial owner, on instruments that are issued (or deemed issued) on or after January 1, 2017, will be subject to a 30% withholding tax (subject to reduction under an applicable treaty). However, the effective date of these rules for certain notes, including the Covered Securities, was postponed until January 1, 2020 by an official notice issued by the Internal Revenue Service (Notice 2016-76).

Notwithstanding the delayed effective date, it is expected that Covered Securities issued on or after January 1, 2017 will be subject to Section 871(m) withholding tax starting in 2020. There are significant uncertainties regarding how the new regulations will apply to the Covered Securities at such time. Barclays may make further announcements if there are further developments regarding how the new regulations will ultimately apply to the Covered Securities.

As noted above, the new regulations apply only to Covered Securities that are issued (or deemed issued) on or after January 1, 2017. However, Covered Securities that are issued on or after January 1, 2017 will have the same CUSIP and ISIN number as Covered Securities that were issued before that date, and accordingly there is unlikely to be a practical way to distinguish among Covered Securities that are subject to withholding under this regime and those that are not. As a result, non-U.S. holders of Covered Securities (including holders of Covered Securities that were purchased on or before December 31, 2016) may not be able to establish to the satisfaction of their custodians or other withholding agents that their Covered Securities are exempt from the new regulations. Accordingly, holders of Covered Securities may therefore find it prudent to assume that their ETNs will be subject to the new regulations starting on January 1, 2020.