Is Lloyds a buy, sell or hold after doubling in stock price?

Lloyds shares have risen to fresh post-GFC highs after a well-received stack of full-year financial results last week gave investors confidence in the bank’s prospects following a bumper rally over the last 12 months.

Shares of Lloyds have risen from around 61p a year ago to 113p as of Wednesday (4 Feb), with the rise coming amid a general recovery in European banking stocks. The question for investors is whether Lloyds maintain its upbeat story.

So, is Lloyds a buy or a sell after this rally?

Deutsche Bank says buy and has raised its price target to 125p from 110p, pointing to a projected jump in tangible net asset value (TNAV) growth and distributions, with combined TNAV and dividend growth expected to peak at 17% in 2026, before moderating to around 13-14% in 2027-28.Last week Lloyds raised its dividend is by 15% to 3.65p a share and announced a £1.75bn share buyback.

Bulls would argue that Lloyds deserves a higher valuation to reflect increase shareholder returns over the coming years that the market is yet to price fully. Return on tangible equity (ROTE) is also set to rise as litigation charges roll off and less difficult backdrop for costs. 

Fourth quarter return on tangible equity of 15.7%. The eye-catching bit for investors from the full-year results was a target of +16% ROTE in 2026 as the bank’s profitability improves, with the cost-income ratio seen below 50%.

Looser capital requirements combined with improved profitability would also support further distribution to shareholders. The Bank of England in December lowered the amount of Tier 1 capital – the CET1 ratio - that UK banks are required to hold by one percentage point from 14% to 13%. If Lloyds can achieve 16%+ then it would allow for significant shareholder returns.

Shore Capital, meanwhile, says sell, arguing that the shares are now fully valued after doubling in the last 12 months, citing a valuation multiple of x1.7 forecast 2026 tangible net assets being the highest since before the financial crisis. The broker was however forced to raise its price target from 84p to 91p as a catchup to the earnings and performance of the shares.

Lloyds posted a 12% rise in pre-tax profits rose 12% to £6.7bn, while revenues rose 7% to £18.3bn as it reaped the rewards of a diversification push to increase revenues in areas like pensions, insurance and wealth management.

Indeed, the bank’s effort to diversify income streams away from the interest rate cycle has been one of the pillars of its earnings growth and why investors are sticking with this stock.

Net interest income was up 6% to £13.6bn, as a structural hedge to reduce the bank’s exposure to falling rates provided a boost. Meanwhile ‘other income’, which reflects fee earnings from its pensions, wealth and insurance businesses, rose 9% to £6.1bn,

UBS says hold, setting a price target of 108p, arguing that the 16% yoy earnings per share growth was fully priced into the shares.

Corporate banking push

Shares got another lift on Wednesday as the FT reported that Lloyds plans to go for a big push in its corporate banking division. Expanding the corporate and institutional banking business is the next phase of the diversification strategy pursued by CEO Charline Nunn since 2022. This business has already growth in recent years - +7% in 2025 and +35% since 2022 - and is it seems could generate further returns. As part of this it launched a new FX service last year to service its CIB clients, supporting a #21% increase in foreign exchange volumes year-on-year.

LLOY Analyst consensus (source FactSet, Saxo)