Is the Westpac share price in the buy zone post-results?

The Westpac Banking Corp (ASX: WBC) share price is bouncing back on Tuesday.

At the time of writing, the banking giant’s shares are up 2% to $23.65.

Why is the Westpac share price rebounding?

The Westpac share price is rising today after a number of brokers retained their buy ratings on the bank’s shares.

For example, after running the rule over the bank’s full year results, the team at Citi has retained its buy rating and $30.00 price target and analysts at Morgans have retained their add rating with a trimmed price target of $25.80.

Elsewhere, over at Goldman Sachs, its team has reiterated its conviction buy rating with an improved price target of $27.60. Based on the current Westpac share price, this implies potential upside of almost 17% for investors.

Goldman has also lifted its dividends per share forecast for FY 2023 to 148 cents. This represents a fully franked 6.25% dividend yield at current levels.

What did Goldman say?

While Goldman wasn’t blown away by Westpac’s margin leverage in FY 2022 and notes that its cost base target has been increased, it remains very positive. This is largely due to the valuation of the Westpac share price and its margin outlook. It explained:

We remain Buy (on CL) rated on WBC given: i) while on the surface, the FY22 result suggested WBC’s NIM leverage was underwhelming relative to some peers, we think 2H22 was adversely impacted by late-in-the-half liquidity build, and management’s guidance on its FY23 NIM trajectory was better than we had previously anticipated, ii) despite WBC revising its FY24E cost target to A$8.6 bn (from A$8.0 bn), the bank’s performance on cost management remains strong in this inflationary environment with a 9% step down in costs expected over the next two years, and iii) the stock is trading at a 22% 12-month forward PER discount to peers (ex-dividend adjusted; historically has traded at a 2% discount), and our revised TP of A$27.60 offers 25% [now 23%] TSR.

The post Is the Westpac share price in the buy zone post-results? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Are ASX 200 bank shares a no-brainer buy in an inflationary environment?
• Why ANZ, Coronado Global, Eclipx, and Westpac shares are dropping
• Why is the Westpac share price dropping 4% today?
• Everything you need to know about the latest Westpac dividend

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.

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