Lloyds Banking Group (LSE: LLOY) shares have been on a storming run, but there are some big disagreements over where the price might go next.
In fact, there’s a really wide range of targets on Lloyds right now. The most optimistic analysts think the shares could reach 130p in the near future — around 30% ahead of where they are now.
Forecasts suggest earnings growth could push the price-to-earnings (P/E) ratio down as low as 7.7 by 2028, on today’s share price. If they’re right, I could see a 150p price target over that timescale as perfectly reasonable. It would put the P/E at 11.5, which I don’t see as stretching — especially with the dividend expected to climb 50% by then, too.
Not so cheerful
At the other end of the scale, however, I’m seeing a very pessimistic target of just 53p. And that’s very close to a 50% slump from where Lloyds shares are today. I won’t worry too much about that, mind. It does very much seem to be an outlier. But it reminds me to be cautious.
The bulk of forecasters are clustering around the average of 1,130p — approximately 13% ahead. And we have to remember these are short-term targets. If Lloyds’ future performance turns out along the lines predicted, I’d expect that average to creep up over the next few years.
Putting Lloyds itself aside for a moment, one key thought comes to mind. Remember when banks used to be boring, plodding entities? And they weren’t the first things pushed up and down by the latest political and economic headlines? When they’re this driven by daily sentiment, it really makes me think markets are in a period of intense fear or uncertainty.
What can private investors do about it? Two things, I think. Firstly, it’s vital to maintain a good amount of diversification in our investments. And we can aim to get an edge on the big players by staying calm, keeping our eyes on the long term, and considering buying on the dips.
The real outlook?
The outlook for Lloyds, and the other FTSE 100 banks, is admittedly harder than usual to predict right now. A fresh round of inflation, and stubbornly high interest rates, could definitely hamper profits at mortgage lenders like Lloyds.
And we might be in for renewed volatility driven by the latest move in the car loan scandal. All done and dusted? Perhaps not. Lawyers for the Consumer Voice group representing car buyers are lining up a legal challenge to the current redress scheme. They claim it shortchanges victims, and they want a better deal.
So, should we steer clear of Lloyds shares until all this uncertainty is resolved? And maybe until analysts have their targets more closely aligned? Well, it’s all ramping up the risk, for sure. And I wouldn’t be surprised to see further share price weakness.
But with a long-term view, I see it as mostly noise. And I think investors should consider buying in uncertain times.
