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At 520p, Barclays‘ (LSE:BARC) shares are trading just below their five-year high of 538p reached in late July. The stock has climbed roughly 40% over the past year, yet it still screens as undervalued with a price-to-earnings (P/E) ratio of just 10.8.
So why does one major broker still expect a further 26% price increase from here?
What the brokers are saying
Seventeen analysts currently cover Barclays, with a consensus Moderate Buy rating and an average 12-month price target of 575p (a 10% gain). But the targets vary widely, from a cautious 510p at Citi to a bullish 655p from Goldman Sachs, the highest among major brokers.
Top broker price targets:
| Broker | Rating | Price target | Upside |
|---|---|---|---|
| Goldman Sachs | Buy | 655p | 26% |
| JPMorgan | Overweight | 610p | 17% |
| Bank of America | Buy | 600p | 15% |
| Jefferies | Buy | 590p | 13% |
| RBC Capital | Outperform | 575p | 11% |
| Citi | Neutral | 510p | -2% |
But is that 655p target realistic, and what could derail the growth story?
The risks behind the rally
Credit impairment charges rose to £1.4bn in H1 2026, up from £1.1bn a year earlier. This included a £228m one-off hit from the collapse of UK property lender Market Financial Solutions amid fraud allegations.
Management now guides for the 2026 loan loss rate to sit around the top of its 50bps–60bps range, reflecting ongoing uncertainty in corporate loan quality. Operating expenses also increased 8.7% to £4.52bn in Q2, ahead of consensus expectations.
But that bank’s recent strong results go a long way to offset that risk. Barclays’ Q2 2026 earnings on July 28 were certainly impressive. Total income rose 16% to £8.3bn, profit before tax surged 32% to £3.3bn, and the bank raised its full-year 2026 income guidance to around £31.5bn. Return on tangible equity (RoTE) hit 16.1%, well above the 12%+ target.
When looking at the same quarter last year, the difference really stands out. Here’s a quick performance comparison:
| Metric | Q2 2025 | Q2 2026 | Change |
|---|---|---|---|
| Total income | £7.19bn | £8.34bn | 16% |
| Profit before tax | £2.48bn | £3.25bn | 31% |
| RoTE | 12.5% | 16.1% | 29% |
| Earnings per share (EPS) | 11.7p | 16.7p | 43% |
Interestingly, the US options market seems to think a big move is coming — a recent put option shows some of the highest implied volatility across the entire equity options market. But which direction is the real question.
The bottom line
Not every broker shares Goldman’s bullish sentiment – Citi remains Neutral – but the outlook is majority positive. JPMorgan, Jefferies, and Bank of America all envision double-digit growth potential.
That view is supported by fundamentals: strong Investment Bank performance, raised guidance, and a P/E ratio of 10.8 that remains below the sector average.
So for investors who want to increase their exposure to the UK banking sector, I’d say Barclays is a good option to consider right now.
But don’t ignore the risks: with credit impairments rising and costs climbing, it may struggle to sustain this momentum through 2026.
Is a further 26% increase likely to happen this year? Probably not, but it’s not an entirely unrealistic target for the next 12 months — assuming the broader economy remains stable.
Should you invest £5,000 in Barclays Plc right now?
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Mark Hartley does not hold any positions in the companies mentioned.
This story originally appeared on Motley Fool
