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Over the past 12 months, Lloyds Banking Group (LSE: LLOY) shares would have turned £10,000 into £14,300. What might the same amount today be worth in another year? Let’s try a bit of informed guesswork.
Broker forecasts
Price targets attached to broker forecasts are the first things to check. There’s no date on them, but they’re generally seen as fairly short-term things. And they’re frequently changed, usually because of a few key things.
Company results can make analysts rethink their outlook, and other news releases can shift opinions. But often, forecasts appear to change just because the share price changes.
So, we shouldn’t treat them too seriously. But they can help quantify market sentiment. We can use them as one factor to help guide our longer-term thinking.
Expert uncertainty
The average from all the brokers I can see is 76p.That’s just 2p above the Lloyds share price at the time of writing. It would only be enough to turn £10,000 into £10,270. That assumes the price-to-earnings (P/E) ratio doesn’t change, currently 12.3 based on 2024 results.
Such a low price seems a bit strange, considering close to half the analysts I can find have Lloyds as a Buy. And only one out of about 20 sees it as a Sell.
It seems as if these wise heads of the City are contradicting themselves. And that’s an important lesson — the so-called experts frequently pull in different directions.
Wide spread
The lack of agreement shows in the range of price targets. The highest at 90p would be enough to turn £10,000 into £12,160. But the most bearish at only 54p would drop us all the way down to just £7,300.
There’s a reminder for us there. Even if we think we see a tide of approval for a stock, always check what the bears have to say.
Lloyds is entirely at the mercy of the UK economy, which isn’t exactly sparkling. And it’s big in mortgages at a time when high interest rates are keeping demand in check. I’m generally upbeat about Lloyds and I’m happy to hold. But it’s far from a risk-free option for anyone to consider.
Further ahead
Broker price targets are a bit too short-term for me. I do use forecasts as part of my analysis, but I prefer to look at the predicted fundamentals as far out as they go.
Forecasts for Lloyds’ earnings per share (EPS) for 2025 suggest an 8.4% rise over 2024. If the share price moves to keep the P/E steady, that could turn £10,000 into £10,840. If the results come out as forecast, that is.
Looking further ahead, EPS forecasts for 2026 could get us up to £14,260. And if 2027 also goes as predicted we could be sitting on £17,230 by then.
Be cautious
Finally, I just want to urge caution when using forecasts and price targets. Analysts generally have a short-term horizon and they’re pretty much forced to put numbers on things were the evidence might not be strong. There’s nothing remotely precise here. And we need to do our own research and make up our own minds.
