Up 10%, why has the Westpac share price smashed other ASX banks this past month?

The Westpac Banking Corp (ASX: WBC) share price has lifted 10.05% over the past month.

In comparison, the S&P/ASX 200 Banks Index (ASX: XBK) and the S&P/ASX 200 Index (ASX: XJO) are up 7.64% and 6.96% respectively.

Shares in the other three big banks — Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) — have climbed between 6.36% and 7.52% over the same period.

So Westpac has clearly outperformed its ASX peers in the banking sector and the broader market. What is going on?

Let’s look into what might be behind the price surge.

What’s going on with the Westpac share price?

The banking giant has not released any price-sensitive news to support its share price acceleration this month.

In fact, on Monday, Westpac shares dipped 1.06% when it announced its third-quarter results. My Foolish colleague James Mickleboro observed that its Q3 earnings report lacked detail around its profits and margins, which could have spearheaded a small sell-off for its share price.

However, after the Q3 results were posted, investment bank Goldman Sachs issued a note stating that Westpac’s earnings were beating forecasts.

The broker said:

While no earnings update was provided, the CET1 ratio, RWA and capital deduction disclosures did imply that the quarterly cash earnings performance may have been run-rating slightly better than what was implied by our previous 2H22E forecasts.

The Goldman Sachs analysts rated Westpac a buy and upgraded its price target to $26.55, giving it an 18.73% upside at the time of writing.

And yesterday, Goldman Sachs doubled down on its bullish stance towards Westpac, noting that the bank had the most potential out of any listed share in the S&P/ASX 200 Banks Index.

The broker listed four reasons, saying:

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% TSR, and we note the stock is trading at a 20% discount to peers, versus the historic average discount of 2%.

Finally, It News reported today the bank acquired the westpac.com website address today from a company in the semiconductor industry. Previously the westpac.com address directed visitors towards a business listed as being in South Korea. Today it redirects them to the westpac.com.au address.

Westpac share price snapshot

The Westpac share price closed 0.8% lower today, trading at $22.34 apiece. Shares in the bank are currently down 13.48% over the past 12 months. Meanwhile, the S&P/ASX 200 Banks Index is down only 2.76% over the same period.

Westpac’s market capitalisation is $78.22 billion based on the current share price.

The post Up 10%, why has the Westpac share price smashed other ASX banks this past month? appeared first on The Motley Fool Australia.

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More reading

• Brokers say BHP and this ASX 200 share are buys
• Is the Westpac share price a buy following the bank’s latest update?
• 5 things to watch on the ASX 200 on Tuesday
• Westpac share price slips following release of Q3 update
• Westpac share price on watch following Q3 update

Motley Fool contributor Matthew Farley 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 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.

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