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Will Barclays‘ (LSE: BARC) shares rise 40% over the next year? I asked the same question on this website last year, in an article titled: ‘Could this surging FTSE 100 stock rise another 40% in the next year?‘
The question was prompted by the dizzying rise of the Blue Eagle bank. Its share price had already quadrupled in value from August 2020 to August 2025. Was it possible for this fabulous run to continue?
For my part, I wrote that I expected the good times to “keep on rolling” but I was sceptical that within 12 months Barclays could hit a 40% return after such a run-up. A year later though, and it looks like I’m eating my words…
Hitting a bullseye
The long and short of it is that Barclays’ share price rose 35%-45% since last August (depending on which day of the month is chosen). Throw in an extra 2.3% from the dividend and I think it’s fair to say the target was hit.
Such performance puts the bank in the top performers of the FTSE 100 over the period. It’s even trouncing some of the big names in US tech such as Nvidia and Palantir!
Why such a strong year? Well, elevated earnings, thanks to higher interest rates, are an important factor. The extra cash has led to a generous share buyback package (£10bn targetted over 2024-2026), which will no doubt have put upwards pressure on the share price.
Cost savings – including use of artificial intelligence (AI ) – played a role too. It’s worth mentioning that these factors have helped all the FTSE 100 banks post similarly excellent years.
The big question then, what’s in store next year? Surely not another 40% rise?
A buy?
On the one hand, there are positive signs. Interest rates are set to stay elevated and may even get a hike or two. That should have a positive effect on earnings. Although higher borrowing costs can lead to defaults, which can become a large problem for banks.
The ongoing incorporation of AI could lead to more cost savings too. Finance has been cited as one of the sectors best-placed to benefit from AI.
A forward price-to-earnings ratio of 9.5 looks very reasonable too. Compare that with the stock’s five-year average P/E of 7.14. On the other, a windfall tax has already been mentioned in the press. Continued strong performance will only increase those calls.
And the worries of an AI stock market crash stateside may affect Barclays more than most given its international operations.
In summary, I think the outlook is positive and the shares are worth considering, but a 40% or more gain will be a difficult target to hit. Then again, I said that last year…
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John Fieldsend owns shares in Barclays and Nvidia.
This story originally appeared on Motley Fool
