After a very difficult time in November, the Westpac Banking Corp (ASX: WBC) share price is bouncing back in December.
With just two trading sessions left to go, the banking giant’s shares are up almost 5% month to date.
This puts the Westpac share price on course to record a gain of over 9% in 2021.
Why is the Westpac share price performing positively in December?
Investors have been buying Westpac’s shares this month on the belief that they were oversold in November. That selling was caused by the release of the bank’s full year results.
While those results revealed strong profit growth in FY 2021, they also revealed expectations for significantly weaker than expected margins in the year ahead. This is being caused largely by aggressive competition for home loans.
In addition, doubts over the bank’s ability to achieve its FY 2024 $8 billion cost base target weighed on sentiment.
The rebound
The team at Morgans saw the weakness in the Westpac share price as a buying opportunity and it appears as though many investors agreed.
Early in December, the broker commented: “WBC’s current share price of ~$20.50 would [..] assume that WBC only manages to reduce its annual cost base to $9.5bn by FY24F, experiences NIM contraction of 50bps from 2H21 to 2H24F and conducts no further capital management.”
“We expect WBC to do notably better than this and we consequently believe that the extent of pessimism being reflected in WBC’s current share price is overdone.”
The good news for investors is that Morgans still sees plenty of scope for the Westpac share price to rise from here despite its recent run. The broker has an add rating and $29.50 price target on its shares. This implies potential upside of 37% over the next 12 months.
The post How has the Westpac (ASX:WBC) share price performed in December? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Westpac right now?
Before you consider Westpac, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Westpac wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
More reading
- How does Westpac stack up against the CBA (ASX:CBA) share price?
- ASX 200 (ASX:XJO) midday update: CBA and Westpac rise, Afterpay tumbles again
- 3 excellent ASX 200 blue chip shares to buy in 2022
- Could 2022 be a good year for the Westpac (ASX:WBC) share price?
- Here’s what Bell Potter thinks of the Westpac (ASX:WBC) share price
Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/3exxt1F
Leave a Reply