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After years of sideways trading, Lloyds’ (LSE: LLOY) share price has experienced an explosive ‘breakout’ this year. Currently, it’s up about 50% year to date and trading at levels not seen since 2015.
Can the bank’s share price keep rising? City analysts seem to think so. Here’s a look at where they see the stock heading over the next year or so…
Why Lloyds shares are flying
Lloyds’ huge share price gains this year have been fuelled by a combination of factors.
For a start, persistently high interest rates in the UK have allowed the bank to earn an attractive return on its loans (when rates are higher, banks can generate a wider spread between borrowing and lending rates and earn more profit). For the first half of 2025, underlying net interest income amounted to £6.7bn, up 5% compared to the first half of 2024.
Next, the bank has been very generous with its shareholder returns. Earlier in the year, it announced a large share buyback programme (share buybacks can boost earnings per share and support a company’s share price). More recently, it raised its first-half dividend by an impressive 15%. Currently, the forward-looking dividend yield is about 4.3%.
The bank stock has also benefitted from a favourable Supreme Court ruling in relation to motor finance. There’s still some uncertainty here, but the ruling significantly narrows the scope for mass claims (like the PPI scandal a few years back).
On top of all this, UK and European bank stocks have seen strong inflows as international investors have looked for value in the global markets. Other banks stocks that have done well in 2025 include Barclays, HSBC, and Santander.
Analysts see further gains ahead
Looking ahead, City analysts expect the share price to keep rising. Currently, the average price target for Lloyds shares is 93p.
That’s roughly 11% above the current share price. Add in the dividend yield, and investors could be looking at total returns of around 15% in the medium term if the price target is hit (there’s no guarantee it will be, of course).
Now obviously, a 15% return isn’t spectacular. But it is decent – over the long run, the stock market tends to return around 7%-10% per year.
My view on Lloyds
So, are Lloyds shares worth a look today? Or are there better opportunities in the market?
Well personally, I feel that there are better opportunities out there at present.
Lloyds shares could definitely keep rising in the near term. Right now, the shares offer a nice combination of value (the forward-looking price-to-earnings ratio using the 2026 earnings forecast is only nine), income, and share price momentum.
However, the fragile UK economy does pose a risk to the bank and taking a three-to-five year view, I reckon there will be plenty of stocks that outperform Lloyds. Some stocks that I see more potential in include international payments powerhouse Wise, ride-share giant Uber, and Asia-focused insurer Prudential.
This story originally appeared on Motley Fool
