Due to robust price positive aspects over the previous 12 months, Barclays (LSE:BARC) shares have eked out a stable return for buyers in the course of the previous decade.

At 270.4p per share, the FTSE 100 financial institution’s price is 3.7% greater than it was 10 years in the past. Because of this £10,000 price of Barclays shares at the moment are price £10,370. Not nice.

However that’s solely a small a part of the story. When one provides within the 52.65p per share of dividends paid out in that point, Barclays has delivered a complete return of 23.9%.

In financial phrases, somebody who put £10k within the financial institution in mid-April 2015 would now be sitting on £12,390.

On the one hand, which may not be thought-about a nasty end result given the powerful buying and selling panorama for UK banks (extra on this later). It’s additionally at all times price remembering that inventory costs can go up in addition to down over the long run.

31.4% return?

However contemplating the FTSE All Share index has delivered a complete return of 82.2% over the identical interval, all of a sudden Barclays’ return doesn’t look all that sturdy.

Can the financial institution’s share price carry out extra strongly from this level on? And may buyers take into account shopping for Barclays shares?

Sadly forecasts for Barclays’ share price solely stretch out to the subsequent 12 months. However they do counsel robust positive aspects over that interval.

Some 17 analysts at present have rankings on the FTSE financial institution. And as is the case with most equities, their share price targets for the subsequent 12 months differ significantly at occasions.

Probably the most optimistic Metropolis dealer has slapped a 410p per share price goal on the excessive avenue financial institution. That represents a 51.6% premium from 68.6p in the present day. On the different finish of the dimensions, one particularly bearish analyst thinks the financial institution will hit 230p in a 12 months, down 14.9% from present ranges.

However on stability, price forecasts among the many analyst are fairly upbeat: the common 12-month goal price is 346.1p, up 28% from in the present day’s 270.4p.

With a dividend of 9.16p per share predicted for 2025 too, Barclays may ship a complete return of 31.4% over the subsequent 12 months if it will probably meet that common price objective.

Are the shares a purchase to contemplate?

With a price-to-earnings (P/E) ratio of 6.4 occasions, Barclays is at present the FTSE 100’s most cost-effective banking share based mostly on anticipated income. This in concept may present the platform for industry-beating price positive aspects over the subsequent 12 months.

The corporate additionally has a big funding financial institution which, if monetary markets steadily get well, may assist the enterprise ship stronger income than its excessive avenue rivals.

But Barclays additionally faces substantial challenges to hitting these share price forecasts. Competitors is fierce, and rates of interest are coming down throughout its UK and US markets. In opposition to this backdrop, I’m anticipating its internet curiosity margin to stay beneath extreme stress (this was simply 3.29% in 2024).

These aggressive pressures, added to powerful financial circumstances in Britain and the opportunity of a US recession, additionally means mortgage progress could proceed to be underwhelming. There’s additionally the opportunity of colossal fines if Barclays is discovered responsible by the UK regulator of mis-selling automotive loans (it’s already put aside £90m to cowl such an eventuality).

Though they’re low-cost, I believe buyers ought to take into account steering away from dangerous Barclays shares proper now.