We keep seeing the same story with the Lloyds Banking Group (LSE: LLOY) share price. It pops up above 100p — and even reached as high as 114.6p in February for a five-year record. But it just doesn’t seem able to stay there. And every time, it’s quickly dipped below the pound level again.
Lloyds’ shares have just done it again this week, but what are the chances they’ll finally hang on to that elusive level for more than a brief spell?
Will the price ever be right?
Analysts have 1,152p as their average short-term price target, with one bold bull looking for 1,300p. Yes, there’s a bear thinking the Lloyds’ share price will fall to just 53p. But that’s a very out-of-date assessment, and I really don’t see it as remotely plausible. Hmmm, I hope I haven’t just jinxed it.
Financial forecasts justify the mildly optimistic average target, I’d say. Here’s what they predict for the next three years. I’ve also included a share price column, which is where it would need to be to bring the predicted price-to-earnings (P/E) ratio for each year up to its 2026 value. For 2026, it’s just the price at the time of writing.
| Year | Earnings per share | P/E | Dividend | Yield | Share price |
| 2026 | 10.0p | 10.2 | 4.3p | 4.1% | 104p |
| 2027 | 11.8p | 8.7 | 5.1p | 4.9% | 122p |
| 2028 | 13.7p | 7.5 | 5.9p | 5.7% | 141p |
It all makes me think Lloyds’ shares are undervalued compared to forecasts for the next two years. But for this year? I’m not so sure. With the economy still fragile, I reckon that below-average P/E’s probably about right. In better times though, I could see it creeping up a couple of points.
So the outlook might be better than the table above suggests. And we heard this week that May inflation was lower than expected, at 2.8%.
Still some clouds
The main problem I see at Lloyds is that it’s so closely tied to the UK housing market. And RBC Capital, talking of housebuilders, recently put out a note saying: “Asset valuations are back to levels last seen in the Great Financial Crisis and without a powerful catalyst we don’t see how to get valuations ‘back to the future’“.
I have little doubt the housing market has a solid long-term future. But while sentiment remains so negative, I can see share price weakness across the sector — and at Lloyds.
Still, I’m buoyed by how well the first quarter of 2026 went. Highlights include…
- Underlying net interest income up 8% to £3.6bn.
- Operating costs down down 3% to £2.5bn.
- Strong CET1 ratio of 13.4% after ordinary dividends.
So what about the price?
Is Lloyds’ share price likely to remain above 100p then? In the short term, I couldn’t put the odds at any more than 50/50. But over the longer term, my confidence is a fair bit higher. Lloyds is a firm Hold for me, and worth considering for long-term investors.
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Alan Oscroft owns shares in Lloyds Banking Group.
