The Barclays (LSE:BARC) share price has been firing on all cylinders this year. The banking stock’s shot up by almost 70% since January as management delivers on its promises. But with so much growth already under its belt, can the share price continue to climb even higher? Here are the latest predictions from City analysts.
Share price forecast
Following its latest third-quarter results, market consensus surrounding the UK’s second-largest bank continues to be bullish. Of the 18 institutional analysts following the business, only four have issued an Hold recommendation, with the rest placing it in either the Outperform or Buy categories. And this strong sentiment’s also reflected in the share price forecast for 2025.
| Opinion | 12-Month Share Price Forecast | Potential Gain/Loss |
| Optimistic | 345p | +33.5% |
| Average | 302.5p | +17.0% |
| Pessimistic | 240p | -7.2% |
So what’s driving this overly positive sentiment? In the bank’s interim results earlier this year, management successfully delivered on its promises with higher net interest income and return on tangible equity (RoTE). Skip ahead to the group’s third-quarter results, and it was more of the same.
Further progress with cost-cutting helped boost pre-tax profits firmly ahead of expectations, coming in at £2.2bn versus £1.9bn year-on-year. But most excitingly, RoTE reached 12.3%. That’s firmly ahead of management’s 10% target for the year. And if bosses can maintain this capital efficiency moving forward, it’ll have achieved its goal of 12% RoTE by 2026, two years early.
What to expect now
With interest rates being steadily cut by the Bank of England, the net interest margin’s already under pressure. However, another growth lever that management has already begun to pull is boosting volume. The bank recently completed the acquisition of Tesco Bank, adding £8.4bn to its loan book in the form of credit card receivables and personal loans, along with £6.8bn in customer deposits.
With only just over a month left in Barclay’s financial year, shareholders will likely have to wait until 2025 before the full impact of this deal can be determined. However, it does help Barclays towards achieving its 2026 £30bn total income goal.
Unfortunately, some near-term challenges could disrupt this journey. The most concerning of these is the ongoing investigation into undisclosed automotive financing commissions. Rival bank Lloyds appears to have the greatest exposure to a negative outcome. But Barclays is far from immune to the potential fallout. And shares could subsequently take a significant tumble if earnings end up taking a hit from legal penalties.
The bottom line
Even after surging, the current Barclays share price puts the firm at a price-to-earnings ratio of 9.3. That’s a slight premium to the 7.5 average its biggest peers are currently trading at. However, considering the progress the bank’s made, a high multiple can be justified. With that said, I’m waiting to see the outcome of the FCA’s investigation before considering adding any of the shares to my portfolio. If wrongdoing’s discovered, the entire banking sector could take a significant hit, and that could create a more attractive entry point for me.
This post was originally published on Motley Fool
