NWG: Future Buybacks And Earnings Will Support Fair Value Amid Mixed Sentiment

NatWest Group's analyst price target has been lifted, with fair value edging up from £6.48 to £6.60, as analysts point to incremental improvements in forecast profitability and valuation multiples following a series of upward target revisions across the Street.

Analyst Commentary

Street research updates have been broadly constructive, with a cluster of recent target price increases signaling greater confidence in NatWest Group's earnings trajectory and capital return potential. However, dispersion in target levels and ratings indicates that not all analysts are aligned on the pace and durability of the improvement.

Bullish Takeaways

• Bullish analysts are lifting price targets into a higher range of 665 GBp to 730 GBp, which implies further upside from current levels and reflects greater confidence in NatWest Group's medium term earnings power.
• Upward revisions following earlier hikes, including the latest increases to 690 GBp and 725 GBp, suggest that previous forecasts may have been too conservative on net interest income resilience and cost discipline.
• Higher targets from firms maintaining positive or overweight stances point to expectations of continued capital generation and scope for progressive dividends and buybacks to support the valuation.
• The step up in target prices over several months, rather than a single one off move, indicates a strengthening view that execution on strategy and balance sheet optimization is tracking ahead of prior assumptions.

Bearish Takeaways

• Some analysts maintaining neutral style ratings, such as Equal Weight or Sector Perform, signal caution that recent share price gains may already discount much of the near term fundamental improvement.
• The spread between more conservative targets around the mid 600s and the top end near 730 GBp highlights lingering uncertainty around revenue sustainability in a normalizing rate environment.
• Bearish analysts remain watchful on execution risk, particularly around cost control and competitive pressures in UK retail and commercial banking, which could cap further re rating.
• Neutral stances also reflect concern that any negative surprise in credit quality or regulatory developments could compress valuation multiples from the higher end of the peer range.

What's in the News

• NatWest is reportedly in advanced talks to sell its 85% stake in workplace pensions platform Cushon to Willis Towers Watson, following a 2023 acquisition valued at £144 million (Sky News).
• The potential Cushon divestment aligns with CEO Paul Thwaite's strategy to simplify the bank and sharpen focus on core businesses, amid strong buyer interest from pensions consolidators (Sky News).
• NatWest has completed a share buyback tranche, repurchasing 71.1 million shares, or 0.88% of its share capital, for £374.29 million under the program announced on July 28, 2025 (company filing).
• The group has strengthened full year 2025 guidance, targeting income excluding notable items of around £16.3 billion and a return on tangible equity above 18%, while otherwise reaffirming its interim outlook (company guidance).

Valuation Changes

• Fair Value has risen slightly from £6.48 to £6.60, reflecting a modest uplift in the intrinsic valuation estimate.
• Discount Rate remains at 8.44%, indicating no change in the assumed risk profile in the updated model.
• Revenue Growth remains effectively unchanged at around 6.28%, suggesting no material revision to top line expectations.
• Net Profit Margin remains at 31.36%, indicating no change in projected profitability.
• Future P/E has risen modestly from 11.28x to 11.49x, implying a slightly higher valuation multiple applied to forward earnings.