The Lloyds (LSE:LLOY) share price has been on a roll in 2025. The UK’s most popular bank stock is up more than 50% since the start of the year. Yet it seems this market-beating winning streak isn’t over just yet.
With clarity surrounding the Supreme Court’s decision regarding the motor financing scandal, several institutional analysts have been revising their 12-month price targets. And if these projections are accurate, more double-digit gains are on the horizon.
So how much money are shareholders potentially about to make? And is now the time to consider buying more?
Latest share price forecasts
The average consensus surrounding Lloyds’ share price continues to hover around 93p. Compared to where the stock’s trading today, that represents a potential 12% gain. However, some analysts are notably more bullish.
For example, earlier this month, JP Morgan raised its 12-month share price forecast from 85p to 98p. Meanwhile, the team at Jefferies is even more optimistic, increasing its expectations for Lloyds to 103p from 92p. That suggests an 18%-23% gain could emerge by this time next year. And in terms of money, a £1,000 investment today could reach up to £1,230.
Needless to say, the prospect of Lloyds finally returning above the £1 threshold for the first time since 2008’s quite exciting. So what’s driving this positive sentiment?
Digging deeper
As previously mentioned, one of the main catalysts driving the Lloyds share price upward is the reduced uncertainty regarding undisclosed commissions for car financing. However, the bank’s core operations have also notably improved.
Underlying profits jumped sharply in its latest interim results, exceeding expectations. The firm’s interest rate hedging is activity bearing fruit with higher net interest lending margins, while both deposits and the loan book are expanding.
At the same time, insider buying activity has started ramping up, signalling strong internal confidence in the business. And with the bank seemingly poised to continue delivering stronger earnings and, in turn, dividends, analysts are understandably upgrading their forecasts.
A no-brainer?
There’s a lot to like about Lloyds shares right now. However, even the most bullish experts recognise there are still risks to consider.
Long-term sustainable growth for a bank like Lloyds is ultimately tied to the British economy. And it’s no secret that GDP growth remains elusive. Falling interest rates are expected to help reignite growth since business loans and mortgages become more affordable.
But that will also gradually reduce the group’s margins over time as its hedges expire. And if there aren’t sufficient new lending volumes, the bank could face some tough earnings comparables.
Even if Lloyds manages to once again beat expectations, there’s a growing political discussion of a potential windfall tax on the banking sector. And having seen the harmful impact of such a policy on North Sea oil & gas companies, it could be a significant handicap.
There’s no guarantee the government will implement this policy. But it remains a significant threat that investors will want to watch closely. Having said that, I’m still cautiously optimistic for the Lloyds share price, and think the stock’s worth taking a more detailed look at.
