What do analysts think the near future might hold for Lloyds Banking Group (LSE: LLOY) shares? They currently have an average price target of 115p on the stock — for another 15% on top of the Lloyds price performance to date.
And that, to remind ourselves, has been a 32% rise in the past 12 months — and a stunning 103% over five years. But what might drive Lloyds shares in the near future?
Waiting for earnings
We’ll have to wait until near the end of July to get the next instalments in the high-street bank results story. We’re due first-half figures from Barclays on 28 July, then the same from Lloyds on 30 July and NatWest the day after. We won’t have HSBC‘s update until 4 August.
In the meantime, it seems likely it’ll be general market movements and any economic developments that might move the Lloyds share price. And maybe investors can take the quiet news period as an opportunity to do some long-term evaluation.
But where does the company see the rest of the year going? With its first-quarter update, the bank set the following for 2026 guidance…
- Underlying net interest income now expected to be greater than £14.9bn
- Cost-to-income ratio of less than 50% (including operating costs of less than £9.9bn)
- Asset quality ratio of approximately 25 basis points
- Return on tangible equity of greater than 16%
- Capital generation of greater than 200 basis points
- To pay down to a CET1 ratio of approximately 13%
What comes next?
That, to me, looks good enough to justify the current Lloyds valuation — with a forward price-to-earnings ratio of around 10. I don’t see it as likely to do much to the share price in the short term, mind.
But my fellow Twelfth Magpie writer Edward Sheldon noted an interesting development. AJ Bell recently reported Lloyds as its most-bought stock — based on a Financial Times story that Lloyds plans to move into US infrastructure and data centre investing.
Yes, that’s right — Lloyds could be getting on the AI bandwagon. Well, in a small way, at least.
That’s the kind of thing that could potentially push Lloyds shares up in the short term. In fact, the price has actually perked up in the last week. But Lloyds doesn’t seem likely to become a major player in financing AI infrastructure.
What should we do?
I won’t let this guide my investment decisions right now. Well, actually, the risk of entering such a new market puts me off somewhat. Still, it’s all still very speculative. And buying on speculation can lead to disappointment.
Whatever happens to Lloyds shares in June, I’m only looking at one thing. It’s the contrast of Lloyds’ upbeat forecasts against the UK’s tough economic outlook.
For me, my holding in Lloyds remains just that — a hold. The current valuation seems about right for my strategy and risk profile.
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Alan Oscroft owns shares in Lloyds Banking Group.
