Broker tips major upside for the Westpac share price

Young investor sits at desk looking happy after discovering Westpac's dividend reinvestment plan

Young investor sits at desk looking happy after discovering Westpac's dividend reinvestment plan

The Westpac Banking Corp (ASX: WBC) share price is trading lower with the market on Friday.

In late morning trade, the banking giant’s shares are down 1.5% to $21.39.

Is the Westpac share price in the buy zone?

While Australia’s oldest bank isn’t getting a lot of love from investors at the moment, one leading broker believes now could be the time to pounce.

According to a recent note out of Goldman Sachs, its analysts have put a conviction buy rating and $26.55 price target on the bank’s shares.

Based on the current Westpac share price, this implies potential upside of 24% for investors over the next 12 months.

This stretches to approximately 30% if you include the 5.7% fully franked dividend yield the broker is expecting in FY 2022.

Why is Westpac a buy?

Goldman believes that the Westpac share price offers the best risk/reward for investors at present. Particularly given its strong exposure to rising interest rates and its cost reduction plans.

The broker commented:

We continue to see WBC as our preferred exposure to the A&NZ Financials reflecting: i) its strong leverage to rising rates, ii) while we think its A$8 bn FY24 cost target will now be unachievable, we still forecast a 7% reduction in underlying expenses, iii) its recent market update highlighted that the business is still investing effectively in its franchise, and iv) our 12-mo TP implies a 23% [now ~30%] TSR, and we note the stock is trading at a 20% discount to peers, versus the historic average discount of 2%.

All in all, this could make Westpac one to consider if you’re looking for exposure to the banking sector as interest rates rise.

The post Broker tips major upside for the Westpac share price appeared first on The Motley Fool Australia.

Should you invest $1,000 in Westpac Banking Corporation right now?

Before you consider Westpac Banking Corporation, 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 Banking Corporation wasn’t one of them.

The online investing service he’s run for over 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.

See The 5 Stocks
*Returns as of September 1 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Motley Fool contributor James Mickleboro has positions in 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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/cRUhwY9

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s