- Lloyds Bank share price is on a roll and has analysts forecasting a consensus mean target of 115p in the next 12 months
- With the UK economy proving more resilient than what some economists had forecasted, the bank's performance could yet pull a surprise
- The bank has also been buying back its shares and that's an attraction for many investors
Lloyds Banking Group has seen a steady recovery in recent weeks, with its stock reaching 109.55p, its highest point since February. This upward trend began in mid-June and has been supported by strategic partnerships, share buybacks, and a resilient UK economy.
Stripe Partnership, Share Buyback and UK Economy Catalyst
A significant part of this growth started around June 11, when Lloyds announced a partnership with Stripe. Through a platform called Lloyds Accept, the bank now allows small businesses to handle in-person and online payments directly through their business accounts.
This move is a clear sign that management is looking for ways to grow revenue beyond traditional lending. Lloyds shares gained over 1% after the launch, reflecting the market’s appetite for higher-return, capital-light business opportunities.
The bank is also managing its valuation through an active share buyback program. Recent filings show that Lloyds repurchased 5,000,000 ordinary shares on June 22 via Goldman Sachs International. This ongoing strategy reduces the total number of shares in circulation, which can help support earnings per share. At the same time, the UK economy has shown more stability than many analysts predicted. Lower default risks mean fewer impairments on Lloyds’ balance sheet.
Valuation Perspective and the 120p Question
Where does the 120 pence target sit relative to current valuations? A street consensus poll of 19 institutional analysts produced an average price target of 98.84p for 2026, with a high-low price range of 120p and 53p respectively. This places the 120p level squarely within the analyst consensus bull case, making it achievable, but not assured.
Current analyst sentiment reflects this progress. A consensus of 19 institutional analysts indicates an average price target of 98.84p for 2026, though the highest estimates reach 120p. For the next 12 months, the average target is 115p, about 5.85% above the current price.
Reaching the 120p mark is considered a bullish scenario. Reaching that level would require another 10% to 15% increase from current prices. While this is possible, it will likely depend on the next few earnings reports. It would likely require consistent performance in upcoming quarterly reports, specifically clean balance sheets and steady net interest income, without an increase in bad loans.
If Lloyds can show steady income and keep bad loans under control through the rest of the year, the stock could continue to move toward that higher target. However, any sudden weakness in the housing market or the general economy could slow that progress.
Is the Current Momentum Sustainable?
Maintaining this momentum depends on several variables. Lloyds currently trades at a price-to-earnings ratio of approximately 14.2x with a dividend yield above 3.3%. However, as a retail bank, its performance is closely tied to the broader economy. If the UK faces a significant slowdown this autumn or if interest rates are cut sharply to stimulate the economy, the lending margins Lloyds relies on could tighten.
The bank’s buying back a lot of its own shares. For instance, on June 22, it bought and canceled 5,000,000 shares, boosting its value per share.
If the UK economy suddenly falters or interest rates get cut sharply, banks would see their lending margins squeezed and credit impairments rise. This would push down their valuations.
A rise to 120p is possible but not probable. The 115p analyst target captures base-case sentiment. To reach 120p, Lloyds would need to perform better than most expect and might rely on outside influences, such as Bank of England rate decisions or unexpected economic news.
