Prediction: by 2026 the hottest Barclays price tag could turn £10,000 into…

I Barclays (LSE:BARC) share price has risen 78% in the past year. Obviously that’s a huge return. The stock is actually up 214% in two years. I sure wish I didn’t have to downsize when I bought my home two years ago.

Either way, it’s been an incredibly successful investment for me, most of my holdings during the Silicon Valley Bank (SVB) fiasco.

So what is the forecast for 2026? Is it possible again?

The true dose

Barclays trades at around 11.3 times forward earnings with this number falling to 9.2 times by 2026. That’s not cheap compared to the broader index or tech stocks, but it’s more than double the figures from two years ago.

Although Barclays has delivered strong earnings growth, the share price appreciation may be due to rebalancing. This happens when the market sentiment towards the stock changes and investors are willing to pay a higher price for what is essentially the same company.

It’s all about perspective. Two years ago, investors were concerned about the state of the economy and the cost of bankruptcy that banks would incur. As a result, Barclays once traded at less than five times earnings.

All that has changed. Investors seem to believe that banks are in the clear – the data backs this up – and business is still growing as interest rates ease.

The problem, however, is that much hope now comes at a price. It is actually trading 4% above its target price. That means the consensus of analysts who combine the stock’s points in the average analysis.

Now there is a caveat here. Analysts do not update their coverage regularly. There may be some improvements to come. Even so, it’s easy to argue that Barclays shares are trading very close to fair value.

There are other metrics to look at – plenty in fact – but they broadly support this idea of ​​reaching a fair value. paid a dividend of 1.7 %. For context, it was at 5.4% when I bought most of my holdings.

The price-to-book ratio now sits at 0.9 compared to 0.4 during the SVB fiasco.

The momentum can be sustained… but not forever

One important lesson about the stock market is that it is not perfect. That would be great if you want to find overlooked stocks that will grow when everyone else wears them. But it also means that investors can stack up on trades and make stocks overvalued relative to their fair value. This is incredibly common and means that the impulse can be self-inflicted.

Finally, eventually, a stock’s momentum unravels when investors realize the fair value has been exceeded.

What I’m saying is that Barclays shares may continue to rise because investors are looking for a chunk of cash. Ultimately, the market has to give it back to the world. Barclays may be over fair value, but I’d like to think it will stabilize soon.

So how much would £10,000 invested in Barclays shares be worth per year? However, I would suggest £10,800. Why is that? Well, it’s close to fair value, but the momentum (business performance) can provide a little boost or two along the way.

With that in mind, I still believe it deserves long-term consideration. Don’t expect any big short-term wins.