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Barclays‘ (LSE:BARC) shares are up a staggering 70% over the last 12 months. And when throwing in the extra gains from dividends, the total return’s closer to 74%.
That means anyone who put £7,000 to work back in November 2024 is now sitting pretty on £12,180. By comparison, passive FTSE 100 index investors are only at around £8,600.
Clearly, some clever stock pickers are in the lead. But for those who are late to the party, will Barclays shares continue to outperform? Here’s what the experts are predicting.
2026 price forecasts
Even after growing significantly, the general sentiment from institutional analysts remains firmly bullish. Fifteen out of 18 active recommendations put Barclays shares in the Buy or Outperform categories. And looking at the share price targets, double-digit capital gains could still be on the table.
The team at Jefferies has projected that by this time next year, the bank stock could be trading at around 470p. Meanwhile, Deutsche Bank is also optimistic with its own 12-month forecast, placing Barclays at 455p. That means if an investor were to buy £7,000 worth of shares today, they could have up to £8,135 by next November.
Obviously, that’s not as impressive as the bank’s recent performance. Nevertheless, a 16.2% return’s nothing to scoff at, especially since the long-term average of the FTSE 100 is closer to just 8%.
Are these forecasts realistic?
While projections of growth can be exciting or reassuring, it’s important to recognise that they are never guarantees. Digging deeper into these projections, both Jefferies and Deutsche have highlighted Barclays’ disciplined approach to capital allocation.
Thanks to the group’s impressive interest rate hedging portfolio in place, even as the Bank of England cuts rates, the company’s expected to continue enjoying a wide net interest margin. That’s terrific news for free cash flow generation, and plays a central role in management’s plan to return £10bn of capital back to shareholders through dividends and buybacks before the end of 2026.
That’s definitely a good recipe to spark bullish momentum and optimism. However, it’s important to recognise that the bank still has challenges to overcome.
Its investment banking arm’s profits remain volatile in an increasingly frothy financial market. At the same time, its lending business continues to be highly sensitive to UK economic conditions. And it’s no secret that the British economy’s not exactly in a strong position right now.
While interest rate cuts have helped alleviate the pressure, business growth and consumer spending remain fairly soft. Both these factors adversely impact the demand for quality borrowing activity. So while Barclays may continue to enjoy wider lending margins, lending volume growth remains a bit of a question mark.
The bottom line
All things considered, I think analysts are right to be bullish on this business. Management’s strategic decision-making over the years has enabled the bank to outmanoeuvre many of its peers, including surpassing Lloyds in terms of market-cap.
Therefore, investors seeking exposure to the British banking sector may want to take a closer look at Barclays’ shares. But personally, I think there are far more exciting opportunities lurking elsewhere within the financial industry.
