Barclays releases 2Q25 U.K. stock picks: six overweight, two underweight calls

Investing.com -- Barclays (LON:BARC) on Monday revealed its second-quarter U.K. stock picks for 2025, assigning Overweight ratings to six U.K. stocks and Underweight ratings to two.

The stocks selected for an Overweight rating by Barclays' fundamental analysts are expected to have significant catalysts in the upcoming quarters, with an average potential upside of 29% to the analysts' price targets.

The list includes Legal & General Group (LON:LGEN), AstraZeneca PLC (LON:AZN), Lloyds Banking Group PLC (LON:LLOY), Marks and Spencer (LON:MKS), Unilever (LON:ULVR), and Imperial Brands (LON:IMB).

AstraZeneca (NASDAQ:AZN) is particularly noted for its potential catalysts, with Barclays pointing out three key upcoming clinical trials: AVANZAR for Dato-DXd, BaxHTN for baxdrostat, and SERENA-6 for camizestrant.

For AVANZAR, Barclays strategists said the trial “had a topline press release that read as positively as we think it possibly could have and we think the data will have a top spot at the upcoming American Society of Clinical Oncology conference, if not a plenary presentation.”

On the other hand, the two stocks assigned an Underweight rating are International Consolidated Airlines (OTC:ICAGY) (IAG) (LON:ICAG) and BT Group (LON:BT), with an average potential downside of -12% to Barclays' price targets.

Analysts at Barclays raised concerns about European flag carriers like IAG, which are seen as vulnerable to a weakening trading environment on the North Atlantic route.

“We expect ex-US demand to weaken on softening consumer and business confidence and premium leisure demand to be particularly vulnerable to a weakening wealth effect. Timing unclear but we think trading deteriorates fast,” the strategists noted.

IAG is scheduled to report its first-quarter results on May 9.

For BT, the bearish view comes as Barclays expects intensified competition in the U.K. broadband space in 2025, with major players ramping up efforts to gain share across both retail and wholesale segments.

The investment bank views BT as particularly vulnerable to an acceleration in market share erosion.

More broadly, Barclays maintains an Overweight position on the U.K. market, favoring the FTSE 100 for its defensive tilt, which could benefit from fears of stagflation or recession.

The index is also considered very cheap. However, the team is more cautious about the FTSE 250, which is more domestically oriented, due to faltering confidence in a domestic recovery.

Despite high levels of bearishness, the U.K.'s lower exposure to tariffs and potential for more Bank of England cuts and government focus on growth could provide some support, strategists said.