It seems like I’ve been predicting a Lloyds Banking Group (LSE: LLOY) share price surge for years now. And it’s finally happened. A great 2025 performance so far has contributed to a 140% rise over the past five years.

I can’t entirely rule out the ‘stopped clock’ possibility. But analyst forecasts are bullish, with a price target range reaching as high as 105p. That’s 38% ahead of the Lloyds share price at the time of writing (25 June).

Price range

Putting too much faith in brokers’ price targets could be a mistake. And basing a decision on the top of the range might compound it. But what kind of valuation, based on earnings forecasts, would it imply?

If Lloyds can grow earnings per share by 75% between 2024 and 2027 as forecasts suggest, that top-end 105p price target would mean a price-to-earnings (P/E) ratio of approximately 9.7. With Lloyds currently on a forecast P/E of 12 based on 2025 expectations, that looks too cheap to me.

But we must be very careful here. The average price target among more than 15 analysts is around the 65p mark. That’s 14% down on the current price. And the lowest end, at just 53p, suggests a 30% price fall.

The average analyst thinks the Lloyds share price will fall, yet I can find only one of them with a Sell recommendation on the stock. The majority of the City experts still think we should Hold or Buy. So why the mismatch?

Uncertainty

I’m sure it’s partly down to the way forecasts are made. Individual analysts will keep their own methods and calculations confidential. But for many it comes down to making estimates based on a number of different scenarios, and then weighting each one according to where they think the probability might lie.

So the price target an analyst might quote isn’t necessarily the price they think is most likely. It can be a risk-weighted average of all outcomes from their scenario calculations.

Also, price targets are usually set on a relatively short-term horizon. Think a price might fall in the short term, but then climb strongly in the long term? It can make perfect sense to set a lower short-term target, but still see the stock as a long-term Buy.

Forget the odds

What should confused private investors do? I like to use forecasts like this just as one piece of guidance. And then base my decisions on where I think Lloyds’ business (not its share price) will be in 10 years time.

The biggest risk right now, for sure, has to be the car loan thing. And, being an investors who seeks safety first, I might wait until we hear the outcome before I buy any more shares.

But my decision to buy Lloyds was made a long time ago, and I see no reason to change my mind now. I’m still holding, and might buy more later in the year.