Right now share markets are witnessing a battle royale between Goldilocks and the bears.

That’s according to Wilsons head of investment strategy David Cassidy, who this week evoked the fairytale to describe the delicate balance challenging ASX shareholders.

“Investors still appear skittish as uncertainty oscillates between fears of a too hot (inflation) and too cold (recession) macro backdrop,” he said in a memo to clients.

“These bear case scenarios have been interspersed with what appears to be the market’s central case view, ‘benign disinflation’ (the goldilocks scenario), leading to good performance from both equities and bonds so far this year.”

So will Goldilocks or the bears win? Where will ASX shares end up after this year is done?

ASX stocks will be watching both US and Australia

Firstly, whether the US economy falls into recession will be a big factor as to how Australian shares will do.

Cassidy is optimistic that America will avoid the worst.

“The labour market does remain an area of resilience and is central to our view that the US can avoid a genuine hard landing,” he said.

“Our core view remains for falling inflation over the year and slowing but not recessionary growth trends.”

This will mean the US Federal Reserve could even cut rates later this year, which would put an absolute rocket under stocks.

Secondly, Cassidy is also positive about how Australia might navigate the battle against inflation.

“We think inflation can come down faster than the RBA is suggesting, given global trends and the likely slowing in domestic demand that is set to unfold,” he said.

“However, residual stickiness in inflation in coming months does raise the risk that the RBA ‘overtightens’ this year.”

The do-or-die number

The crucial threshold for Cassidy is whether the Reserve Bank will push its cash rate higher than 4%. 

It’s currently at 3.35%.

“If the RBA is forced to move above 4% and hold rates there, the risks of an economic hard landing undoubtedly rise, despite the resilience of the economy to date,” he said.

“We still see a move above 4% as unlikely, and we still see the inflation and growth dynamics as likely to allow the RBA to ease by year end.”

Cassidy is in no doubt much volatility is to come this year, similar to last year.

But he urged investors to not “let the bears get you”.

“Our core view remains constructive,” he said.

“While acknowledging how the strong start to the year for equities has crimped near-term return prospects, we think 12-month prospects for equities remain respectable.”

So how should investors take advantage? What should they buy?

“We continue to emphasise high quality, earnings-resilient equity portfolios as inflation ebbs and growth slows.”

The post ‘Don’t let the bears get you’: Where will ASX shares end up in 2023? appeared first on The Motley Fool Australia.

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More reading

• Should you dig into Rio Tinto shares before the ASX 200 miner reports next week?
• How to generate passive income the Warren Buffett way with ASX shares
• Here are the top 10 ASX 200 shares today
• Two ASX shares with bucketloads of growth potential: experts
• If I invest $1,000 in AGL shares now, what could my return be this year?

Motley Fool contributor Tony Yoo 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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Rio Tinto Limited (ASX: RIO) shares have been on a tear since 1 November.

On the back of a big surge in the price of iron ore and copper, shares in the S&P/ASX 200 Index (ASX: XJO) listed miner have gained a whopping 41% since the closing bell on 31 October.

Atop the share price gains, Rio Tinto also pays a fully franked trailing dividend yield of 7.7%.

Of course, that’s all water under the bridge.

With the miner reporting its full-year results next Wednesday, 22 February, many ASX 200 investors are wondering, is it a good time to buy shares before those results are released?  

To buy or not to buy?

Buying Rio Tinto shares before it releases the full-year results is not without risk.

Shares could see a significant move lower, as well as higher, on the day.

One of the things investors will be keeping a close eye on is the earnings guidance provided by management, alongside any forward-looking statements, particularly involving its growth projects. If guidance comes with growth expectations, Rio Tinto shares could gain on the day.

Another key factor will be whether the company exceeds or falls short of consensus expectations. Any outperformance will offer headwinds for the share price while falling short of market forecasts could usher in some selling on the day.

What kind of profit is the market expecting from Rio Tinto shares?

According to the latest research from Goldman Sachs, consensus estimates forecast full-year underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$26.7 billion.

That’s down 29% from the underlying EBITDA of US$37.7 billion reported last year. But as the decline is widely expected, much of that fall will already be priced in.

Goldman has a slightly higher EBITDA forecast of US$26.8 billion for FY23, believing Rio’s copper and minerals segment will outperform.

Profits will be another metric that could send Rio Tinto shares higher or lower next Wednesday.

Consensus expectation forecast net profit after tax (NPAT) of US$13.7 billion. Goldman believes NPAT will fall short of that and come in at US$12.9 billion, citing higher than expected depreciation and amortisation, rehab costs and tax.

Then there’s the dividend payout.

Consensus forecasts are for Rio Tinto to pay a full year, 100% franked dividend of US$4.92 per share, a steep drop from the US$7.93 per share paid out last year. Goldman believes the market is being optimistic here. Its analysts forecast a final payout of US$4.64 per share.

Which brings us back to the question, should investors snap up some Rio Tinto shares before the ASX 200 miner reports next week?

Well, as a longer-term investor, I know that timing the market is no easy thing. I also know that longer-term the world is going to need a lot more iron ore, copper and aluminium.

And with Goldman Sachs issuing a target price of $132 on Rio Tinto shares – some 6% above Friday’s closing price – I’d say Rio Tinto shares are well worth considering adding to your long-term portfolio.

Before, or after, the company reports.

The post Should you dig into Rio Tinto shares before the ASX 200 miner reports next week? appeared first on The Motley Fool Australia.

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More reading

• Why experts say these ASX 200 blue chip shares are buys
• Here’s the iron ore price forecast for 2023: CBA
• Own Rio Tinto shares? Here’s what the market is expecting from its FY 2022 results
• How I’d generate a $50,000 retirement income from Rio Tinto shares
• With interest rates heading higher again, the risk is to the downside for these popular blue chip ASX shares

Motley Fool contributor Bernd Struben 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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When it comes to generating a passive income from ASX shares, investors could learn a lot from Warren Buffett.

The Oracle of Omaha receives huge pay checks from his investments each year and there’s nothing to stop you from doing the same.

Passive income the Buffett way

Warren Buffett has a penchant for making buy and hold investments in high quality companies with positive long term outlooks that are trading at fair prices and pay sustainable dividends.

A prime example of this is Buffett’s long term investment in Coca-Cola Co, which comprises approximately 400 million shares.

In 2022, his Berkshire Hathaway business received a whopping US$704 million in dividend income from Coca-Cola Co.

But what makes this particularly impressive is that these dividends come from an original investment of US$1.3 billion.

This means the Buffett earned more than half his original investment back in dividends last year.

And if you include the many dividends that have been paid since he bought his shares in the late 1980s, Buffett has received approximately US$10 billion from Coca-Cola Co’s shares alone.

That’s almost seven times his original investment and you can bet that there’s plenty more to come.

But don’t worry if you don’t have US$1.3 billion down the back of the sofa to invest! Smaller investments would still have been very rewarding.

For example, had you invested a more modest $10,000 at the same time as Warren Buffett, you would have received $5,400 in dividends last year. You would also have received almost $70,000 in dividends in total during your investment period. All from sitting patiently on a single $10,000 investment!

What about ASX shares?

While we may not have Coca-Cola on the Australian share market (anymore), there are plenty of ASX shares that have characteristics that Buffett looks for when making investments.

A few for investors to look closely at include energy infrastructure company APA Group (ASX: APA), drinks company Endeavour Group Ltd (ASX: EDV), industrial property company Goodman Group (ASX: GMG), and wine giant Treasury Wine Estates Ltd (ASX: TWE).

The post How to generate passive income the Warren Buffett way with ASX shares appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 stocks on the move following earnings updates
• 3 ASX 200 shares that could drive strong returns in an inflationary world: expert
• Should I buy Endeavour shares following the ASX 200 company’s stellar results?
• Why CBA, Corporate Travel Management, Treasury Wine, and Westpac shares are dropping
• Treasury Wine share price sinks 7% despite solid earnings growth

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 positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has positions in and has recommended Apa Group. The Motley Fool Australia has recommended Berkshire Hathaway, Goodman Group, and Treasury Wine Estates. 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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The S&P/ASX 200 Index (ASX: XJO) ended the week in the red, falling 0.86% on Friday to close at 7,346.8 points. That leaves it down 1.17% week-on-week.

Today’s tumble followed an equally disappointing overnight session on Wall Street. Dow Jones Industrial Average Index (DJX: .DJI) slumped 1.3%, the S&P 500 Index (SP: .INX) slipped 1.4%, and the Nasdaq Composite Index (NASDAQ: .IXIC) dumped 1.8%.

Back home, it was a bloodbath across much of the market today.

Tech was hit hardest, with the S&P/ASX 200 Information Technology Index (ASX: XIJ) tumbling 2.3%. Its worst performer was the Block Inc (ASX: SQ2) share price, which fell 7.8%.

The S&P/ASX 200 Energy Index (ASX: XEJ) also suffered, falling 1.8% as coal producers spent a second day deep in the red after tumbling amid news of the NSW government’s coal price cap policy yesterday.

There was a bright spot on the ASX 200 today, however. That was the S&P/ASX Utilities Index (ASX: XUJ), which rose 1%, driven by the Origin Energy Ltd (ASX: ORG) share price’s 1.7% gain.

So, with all that in mind, which ASX 200 shares outperformed all others today? Let’s take a look.

Top 10 ASX 200 shares countdown

The biggest gainer on the ASX 200 today was the QBE Insurance Group Ltd (ASX: QBE) share price. It rose 7.4% to close at $14.39.

The insurer posted its full-year earnings this morning, detailing a 2.7% jump in net profit after tax (NPAT) and a 30-cent final dividend­ up 57% year-on-year.

These shares made today’s biggest gains:

ASX-listed company	Share price	Price change
QBE Insurance Group Ltd (ASX: QBE)	$14.39	7.39%
A2 Milk Company Ltd (ASX: A2M)	$7.10	6.29%
Corporate Travel Management Ltd (ASX: CTD)	$18.10	4.5%
GUD Holdings Limited (ASX: GUD)	$10.04	4.47%
Imugene Limited (ASX: IMU)	$0.14	3.7%
Super Retail Group Ltd (ASX: SUL)	$12.90	3.2%
Orora Ltd (ASX: ORA)	$3.43	3%
Computershare Limited (ASX: CPU)	$23.88	2.67%
Graincorp Ltd (ASX: GNC)	$7.78	2.37%
Collins Foods Ltd (ASX: CKF)	$8.87	2.31%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• 4 ASX 200 shares rerated by brokers following earnings results
• Why A2 Milk, Piedmont Lithium, QBE, and Super Retail shares are racing higher
• QBE share price leaps 10% amid explosive dividend growth
• Should I pour in and buy A2 Milk shares before the ASX 200 company reports on Monday?
• Why term deposits can’t compete with these 5 ASX dividend machines

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Collins Foods, and Super Retail Group. The Motley Fool Australia has positions in and has recommended Block and Super Retail Group. The Motley Fool Australia has recommended A2 Milk, Collins Foods, and Corporate Travel Management. 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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Are you looking to add some growth shares to your portfolio?

If you are, two ASX growth shares that could be worth considering are listed below. Here’s why they are rated as buys:

Allkem Ltd (ASX: AKE)

The first ASX growth share to consider is Allkem. It is one of the world’s largest lithium miners aiming to maintain a 10% share of global lithium supply over the long term.

Although Goldman Sachs is bearish on the lithium industry, it is positive on Allkem due to its production growth plans and its downstream optionality. The broker commented:

Of our covered Australian lithium companies, Allkem has the best LCE growth outlook with production growing >4x to FY27E with further downstream optionality on carbonate production

Goldman has a buy rating and $15.50 price target on Allkem’s shares.

Lovisa Holdings Limited (ASX: LOV)

Another ASX growth share to consider is fast-fashion jewellery retailer, Lovisa.

Much like Allkem, it is the company’s growth plans that has analysts and investors excited. Lovisa has been growing its store network at a rapid rate in recent years but isn’t anywhere near the end of its journey. This is a journey being navigated by a highly talented and experienced management team that has been there before with other global retail brands.

In light of this, Lovisa has been tipped to become one of Australia’s biggest retail success stories by analysts at Morgans. The broker said:

LOV may just prove to be one of the biggest success stories in Australian retail. With ambitious new leadership in place, we think now is the time LOV steps up to become a global force. Investment will be needed to expand LOV’s network in the US and Europe and to take it into new markets, but the returns could be stellar.

Morgans currently has an add rating and $28.50 price target on Lovisa’s shares.

The post Two ASX shares with bucketloads of growth potential: experts appeared first on The Motley Fool Australia.

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• Why this US$1 trillion milestone matters for ASX 200 lithium shares
• Could this new advancement reignite ASX 200 lithium stocks?
• How to create a second income from ASX growth shares
• 2 highly-rated ASX growth shares to buy according to experts
• 2 ASX growth shares that also offer incredible dividends

Motley Fool contributor James Mickleboro has positions in Allkem. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. 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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AGL Energy Limited (ASX: AGL) shares have come under pressure this month.

Since the start of February, the energy giant’s shares have fallen 5.5%.

All of this decline has come since the release of AGL’s half year results, which fell well short of expectations.

For the six months ended 31 December, AGL reported an underlying net profit after tax of $87 million, which was a massive 55% decline on the prior corresponding period. This led to AGL slashing its dividend by half to 8 cents per share.

Well, with the bad news out of the way, investors may now be looking at AGL shares and wondering if an investment opportunity has been created by this weakness.

What if you were to invest $1,000 into its shares now? Would you get a good return on your investment in 2023?

Would you get a good return from AGL shares?

While opinion is divided on where AGL shares are heading, one leading broker sees plenty of upside ahead for investors. Particularly given that a return to form is expected in FY 2024.

According to a note out of Credit Suisse, its analysts responded to AGL’s half year results by retaining their outperform rating with a trimmed price target of $8.70.

Based on the current AGL share price of $7.22, this implies a potential return of 20.5% for investors over the next 12 months.

This means that a $1,000 investment would turn into $1,205 if Credit Suisse is on the money with its recommendation.

In addition, the market is expecting a 26 cents per share dividend in FY 2023, which equates to a 3.6% dividend yield. This would add an extra $36 to your return, bringing your total potential return to a solid $1,241.

The post If I invest $1,000 in AGL shares now, what could my return be this year? appeared first on The Motley Fool Australia.

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• Company directors are buying the dip on AGL shares. Should you?
• Why AGL, New Hope, News Corp, and REA shares are dropping today
• Is the AGL share price sell off a buying opportunity?
• 5 things to watch on the ASX 200 on Friday
• How to burn a billion dollars: AGL shares tumble 10% on painful half-year results

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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The AMP Ltd (ASX: AMP) share price took a tumble on Thursday after the former-financial giant dropped its full-year earnings, declaring its return to dividend.

The stock dumped 13.4% in yesterday’s session and it’s continuing its fall today. It’s trading 1.32% lower at $1.12 at the time of writing.

That’s its lowest point in months. And looking further back, the S&P/ASX 200 Index (ASX: XJO) stock has dumped 79% since February 2018.

Does that leave the AMP share price in the buy zone right now? Let’s take a look.

Are AMP shares a buy following Thursday’s dive?

The market turned its back on AMP shares on Thursday when the company announced a $184 million underlying net profit after tax (NPAT). That marked a 34% year-on-year fall.

The dint was mainly put down to market volatility, repricing in the wealth management business, and a reduced net interest margin in its bank business.

Though, it did post its first dividend in four years – offering investors 2.5 cents per share.

It also vowed to continue its $1.1 billion capital return initiative in the coming financial year.

While the 20% franked dividend did mark a milestone for the embattled company, it wasn’t enough to impress UBS.

The broker kept its sell rating on AMP shares, tipping them to fall to $1.09, The Australian reported. That marks a potential 2.75% downside on its current price.

Analysts were disappointed by the results and guidance, saying courtesy of the publication:

[O]ur first impressions are that the result highlights the depth of challenges facing the core businesses, and FY23 guidance commentary does not indicate FY23 will be much easier.

Looking to future dividends, the ASX 200 staple is tipped to pay 4 cents per share in financial year 2023, according to CommSec data. That’s forecasted to increase to 5.2 cents per share in financial year 2024.

The post Are AMP shares finally cheap enough to buy following Thursday’s 13% crash? appeared first on The Motley Fool Australia.

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• Here are the 3 most heavily traded ASX 200 shares on Thursday
• The AMP dividend is back! Here’s what you need to know
• Why AMP, Evolution, Perenti, and Whitehaven Coal shares are dropping
• AMP share price dives 12% on earnings miss
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Brooke Cooper 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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It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

CSL Limited (ASX: CSL)

According to a note out of Citi, its analysts have retained their buy rating on this biotherapeutics company’s shares with an improved price target of $350.00. This follows the release of a strong first half result. Citi was particularly impressed with CSL’s plasma collection growth and believes it will be supportive of future revenue growth. Outside this, the broker feels that CSL’s shares deserve to trade on higher multiples in-line with long term averages. The CSL share price is trading at $297.77 this afternoon.

Evolution Mining Ltd (ASX: EVN)

A note out of Morgans reveals that its analysts have retained their add rating and $3.70 price target on this gold miner’s shares. While the broker was a touch disappointed with the company’s first half performance, it was pleased to see that its full year production and cost guidance has been reaffirmed. Morgans feels this suggests that a strong second half is coming. The Evolution share price is fetching $2.87 on Friday.

Telstra Group Ltd (ASX: TLS)

Analysts at Goldman Sachs have retained their buy rating and $4.60 price target on this telco giant’s shares. This follows the release of a half year result which came in a touch ahead of the broker’s estimates thanks to the mobile business. This has led to Goldman increasing its earnings estimates modestly through to FY 2025. The Telstra share price is trading at $4.22 today.

The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

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• Passive income watch: 3 ASX 200 shares that announced boosted dividends this week
• Broker gives its verdict on the Telstra share price post-results
• Passive income watch: 3 ASX 200 shares that slashed their dividends this week
• Evolution Mining share price dives after 50% cut to dividend
• Why Bapcor, Magellan, Sonic Healthcare, and Telstra shares are charging higher

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has positions in and has recommended Telstra Group. 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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The ASX 200 earnings season is well underway with brokers progressively rerating various S&P/ASX 200 Index (ASX: XJO) shares based on their FY23 half-year results.

Here we take a look at four ASX 200 shares that have received upgrades from the experts, courtesy of The Australian.

Cochlear Limited (ASX: COH)

Cochlear released a strong set of results for the six months ending 31 December. There was a 9% increase in sales revenue to a record $893 million but its underlying net profit fell 10% due to increased costs.

A strong balance sheet enabled the ASX 200 stalwart to maintain its interim dividend at $1.55 per share.

Cochlear also announced a progressive on-market buyback, starting with a $75 million program.

Cochlear reaffirmed its FY23 guidance. It expects an underlying net profit of between $290 million to $305 million, up 5% to 10% on FY22.

On the back of this news, Morgan Stanley raised its rating on Cochlear to equal weight. The broker has given Cochlear a share price target of $214.

RBC Capital rerated the stock to ‘sector perform’ with a $207 target. Jarden Securities cut Cochlear shares to neutral with a price target of $224.71.

The Cochlear share price is currently $225.02, down 0.63%. It is up 7.7% for the week.

Corporate Travel Management Ltd (ASX: CTD)

The ASX 200 travel share fell upon the release of the company’s half-year results, despite a $15.7 million profit. Corporate Travel also reported $4.2 billion in total transaction value (TTV), up 102% year over year.

The company reported $51.3 million in underlying earnings before interest, tax, depreciation, and amortisation (EBITDA), up 182%, and a $15.7 million statutory net profit after tax (NPAT), up from a $10 million loss.

The ASX 200 share will pay an unfranked interim dividend of 6 cents per share.

Looking forward, Corporate Travel is expecting record full-year earnings with forecasted EBITDA of between $160 million and $180 million and an underlying profit before tax of between $120 million to $140 million.

Investment group CLSA raised its rating to reduce with a share price target of $16.50. The Corporate Travel Management share price is already well above this target at $18.18, up 5.37% today and up 10% for the week.

Vicinity Centres (ASX: VCX)

A large real estate investment trust (REIT) within the ASX 200, Vicinity Centres announced a 24.1% bump to funds from operations (FFO) at $357.1 million. This was primarily due to a 20.5% increase in net property income to $459.6 million.

The company said there was “continued strength of retail sales leading to improved cash collections, rental growth, and higher percentage rent”.

The A-REIT has revised its FY23 guidance to FFO per share of between 14 cents to 14.6 cents.

Vicinity Centres declared an interim distribution of 5.75 cents per share, up 22.3% on 1H FY22.

JPMorgan upgraded its rating on the ASX 200 share to neutral with a price target of $2.10. CLSA cut its rating to sell with a target price of $1.88.

The Vicinity Centres share price is currently $2.10, up 0.48%. It is up 6% for the week.

Wesfarmers Ltd (ASX: WES)

Wesfarmers had a ripper result for 1H FY23, reporting a 27% jump in revenue to $22.56 billion and a 14.1% bump to NPAT at $1.38 billion. Basic earnings per share (EPS) came to $1.223 – a 14% rise.

The top 10 ASX 200 share will pay a boosted dividend of 88 cents per share, up 10% on 1H FY22.

Macquarie has raised its rating to neutral with a price target of $56.70, up 23%. This implies a potential 11% upside for Wesfarmers investors, with the share price currently $50.96, down 0.7% today.

Jarden Securities went the other way and cut its rating to neutral with a price target of $46.

The Wesfarmers share price is up 3.7% for the week.

The post 4 ASX 200 shares rerated by brokers following earnings results appeared first on The Motley Fool Australia.

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More reading

• Passive income watch: 3 ASX 200 shares that announced boosted dividends this week
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why did the ASX 200 leap higher on rising unemployment data?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Macquarie Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear and JPMorgan Chase. The Motley Fool Australia has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has recommended Cochlear and Corporate Travel Management. 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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National Australia Bank Ltd (ASX: NAB) shares are on course to end the week in the red.

In afternoon trade, the banking giant’s shares are down almost 2.5% to $29.78.

This means that its shares are down almost 6% since this time last week.

Should you buy NAB shares?

According to analysts at Goldman Sachs, they believe that investors should be loading up on NAB shares following the release of the bank’s first quarter update.

In response to the stronger than expected update, the broker commented:

NAB has released its 1Q23 trading update, with unaudited cash earnings from continuing operations of A$2.15 bn, up 18% on the previous period average, run-rating 3% above what was implied by our previous 1H23E forecasts. The better than expected performance was driven by stronger revenues (Markets) and lower BDDs, partially offset by higher expenses. NAB’s CET1 ratio of 11.3% was running in-line with our forecasts.

In light of this, the broker has reiterated its buy rating with a $35.42 price target. Based on where NAB shares are currently trading, this implies potential upside of 19% over the next 12 months.

Why is Goldman bullish?

Goldman explained that it is bullish on NAB due largely to its exposure to commercial lending, which it expects to fare better than home lending in the current environment.

The broker believes this will be supportive of further net interest margin (NIM) strength. It said:

We reiterate our Buy on NAB given: 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, which we think leaves it well positioned for an environment of elevated inflationary pressure, iii) NAB’s 1Q23 operating trends seem consistent with management commentary at its FY22 result, particularly with regard to NIMs, which we view as a positive given the commentary CBA made at its 1H23 result, which suggested NIMs have peaked. Reiterate Buy.

The post Should I buy NAB shares after the ASX 200 bank’s latest update? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• NAB share price higher on stronger than expected Q1 update
• NAB share price in focus following Q1 $2.15b cash profit
• Earnings preview: Here are the ASX shares reporting on Thursday
• 5 things to watch on the ASX 200 on Thursday

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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