The Barclays (LSE: BARC) share price hit a five-year high this month of 531.3p, after soaring a whopping 213%. And at the time of writing (24 July), it’s not far below that. And it doesn’t look overpriced, in my judgement.
It seems the experts are in the same boat. They’re strongly bullish on Barclays, and think the bank could have a lot to offer in the next few years…
Bullish price targets
Broker targets have been rising. At the end of June, Berenberg set the share price bar at 620p. That’s a further 19% ahead of where the shares are today. It’s up from JP Morgan‘s earlier 600p target. And even that would mean a further 15% rise on top of the stunning performance we’ve already seen.
To be fair, the average target of 566p is only about 8.5% ahead. But the lower-end of the scale is mostly dominated by old estimates, which look out of date.
My thoughts on what the Barclays share price might achieve? I’m more optimistic than even Berenberg, though with a longer-term horizon. Let me explain why…
Track record continuing?
Barclays’ earnings per share (EPS) suffered from the pandemic crisis. But since hitting a low in 2023, diluted EPS climbed 57% by 2025. At the time, here’s what the boss had to say…
Barclays achieved all financial guidance in 2025. RoTE was 11.3% as all divisions delivered double-digit RoTE. We distributed £3.7bn to our shareholders, including the £1.0bn share buyback announced today, up from £3.0bn in 2024.
— CEO C. S. Venkatakrishnan, FY 2025
Looking forward, analysts forecast a further 75% EPS climb between 2025 and 2028. And that’s what I think could justify a significantly higher share price.
Low valuation
Forecasts put the 2026 price-to-earnings (P/E) ratio at 10, which is possibly fair considering the current economic climate.
But it could drop to only seven by 2028. I sincerely hope inflation will be better controlled by then, and the Middle East will be closer to something resembling peace. Still, to be honest, I’d have said that two years ago too, and I wouldn’t exactly have been on the money. Trying to guess the future is one of the biggest risks in this business.
If the Barclays share price rises to just keep its forward P/E around 10, that should mean a share price of about 740p by then. And if I add in the current premium suggested by the average broker price target, we could be looking at more than 800p.
Bottom line
Further economic weakness in the UK or US could still spell trouble for the Barclays shares. And share prices often don’t go where I expect them to, so I’m really just attempting informed guesses here. I also don’t see much safety margin at the moment, so there has to be a real chance of share price weakness ahead.
But on balance, if I didn’t already have enough Lloyds Banking Group shares, I’d be looking to add some Barclays to my Stocks and Shares ISA. I think long-term investors could do well to consider it, along with a handful of select quality shares…
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Alan Oscroft owns shares in Lloyds Banking Group.
