The National Australia Bank Ltd (ASX: NAB) share price took an almighty beating on Thursday.
The banking giantâs shares ended the day over 6% lower at $26.72.
This leaves NAB’s shares trading within throwing distance of their 52-week low.
Why was the NAB share price sold off?
Investors were hitting the sell button yesterday after the bankâs half-year results fell short of expectations.
Goldman Sachs summarised what went wrong for NAB. It commented:
NABâs 1H23 cash earnings were up 17% on pcp but 4% below GSe, driven by lower-than-expected NIMs. While headline NIM was underwhelming, we note that a driver of this was a reclassification of net interest income into trading income.
Is this a buying opportunity?
While Goldman Sachs clearly wasnât impressed with the bankâs results, it does still see a lot of value in the NAB share price.
As a result, the broker has retained its buy rating on its shares with a reduced price target of $30.69. This implies potential upside of almost 15% for investors over the next 12 months.
In addition, Goldman is now forecasting a $1.66 per share fully franked dividend in FY 2023. This represents a 6.2% yield, which boosts the total return on offer with NAB shares to 21%.
What did the broker say?
Goldman remains positive on the NAB share price for five key reasons. It explains:
Our Buy rating on NAB is predicated on: i) we see volume momentum over the next 12 months as favouring commercial volumes over housing volumes, and we believe NAB provides the best exposure to this thematic, ii) NAB has delivered the highest levels of productivity over the last three years and its investments continue to yield benefits (A$400 mn expected in FY23E), which we think leaves it well positioned for an environment of elevated inflationary pressure, iii) NABâs strong capital surplus position (A$3.1 bn of surplus capital above the top-end of its target CET1 range of 11.0-11.5%) allows flexibility for further buy-backs, v) NAB returns improvements vs. peers is not reflected in valuations (details within), and vi) our revised TP offers c. 21% TSR.
The post Is the NAB share price in the buy zone after crashing? appeared first on The Motley Fool Australia.
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More reading
- 5 things to watch on the ASX 200 on Friday
- Here are the 3 most heavily traded ASX 200 shares on Thursday
- Why Genesis Minerals, NAB, oOh!Media, and Super Retail shares are sinking today
- Everything you need to know about the NAB dividend
- NAB shares dive 8% as EPS downgrades expected
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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