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The National Australia Bank Ltd (ASX: NAB) share price is having an excellent day on Thursday.

The banking giant’s shares are among the best performers on the ASX 200 with a gain of over 3% to $29.30.

This leaves the NAB share price trading within sight of its 52-week high of $30.30.

Why are investors bidding the NAB share price higher today?

The catalyst for the rise in the NAB share price on Thursday has been the release of the bank’s first quarter update.

And much like the update from rival Commonwealth Bank of Australia (ASX: CBA) yesterday, NAB’s update smashed the market’s expectations.

For the three months ended 31 December, NAB delivered an 8% increase in revenue over FY 2021’s second half quarterly average and a 12% increase in cash earnings to $1.8 billion.

It is the latter figure that has got investors and analysts most excited. Particularly given the margin pressures that NAB and the rest of the banks have been facing due to aggressive home loan competition. These pressures led to NAB’s net interest margin (NIM) declining by 5 basis points to 1.64% during the quarter.

But that couldn’t stop its earnings from smashing the market’s expectations.

NAB’s earnings smash expectations

For example, Bell Potter, which has been very bullish on the NAB share price, was only expecting cash earnings of ~$1.59 billion for the quarter. This means that NAB outperformed its estimates by over 13%.

It was a similar story over at Goldman Sachs. Its analysts have also been very positive on the bank, naming NAB as their top pick among the majors. But even they didn’t foresee such a strong quarter.

Goldman commented: “NAB has released its 1Q22 trading update, with unaudited cash earnings from continuing operations of A$1.80 bn, up 12% on the previous period average, run-rating 6% ahead of what is implied by our current 1H22E forecasts.”

The broker also highlights that management has reaffirmed its guidance for broadly flat expenses in FY 2022 despite reporting a 2% increase during the first quarter. Goldman feels this is still achievable given the bank’s habit of front-end loading its expenses.

Its analysts explained: “While cost growth of 2% came in above our expectations, and ahead of management’s “broadly flat in FY22” guidance, we note two things that leave us comfortable with our current expense forecasts: i) NAB has historically seen its cost growth front-end loaded into 1Q, and ii) management has explicitly reiterated its target.”

Can its shares keep rising?

Goldman Sachs currently has a conviction buy rating and $31.15 price target on the bank’s shares.

Based on the current NAB share price, this suggests potential upside of 6%. However, once the broker has adjusted its financial model, there’s every chance that it could bump up its valuation to reflect this better than expected performance. Stay tuned for that.

The post NAB (ASX:NAB) share price jumps after scintillating quarter appeared first on The Motley Fool Australia.

More reading

• Shareholders are happy with the NAB (ASX:NAB) earnings beat. But what do analysts say?
• ASX 200 (ASX:XJO) midday update: NAB impresses, ASX CEO to retire before CHESS replacement completes
• NAB (ASX:NAB) share price in focus after cash earnings smash analyst estimates
• 5 things to watch on the ASX 200 on Thursday
• Rising tide? Here’s why ASX 200 bank shares are having such a good run today

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 Bruce Jackson.

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Shares in Megaport Ltd (ASX: MP1) are charging higher in afternoon trade and now sit 7.8% up at $14.67 apiece.

Investors are piling into Megaport as momentum spills over from the tech player’s half-yearly results released yesterday.

Now analysts have chimed in with their opinions on Megaport’s results and the outlook for the share price in 2022.

What are analysts saying about Megaport?

Even though its half-year results were solid, analysts at Jefferies reckon Megaport might still struggle to hit its break even point this year.

Profit after direct costs is up almost 70% year on year to $30.9 million. Revenue is up 42% to $52 million. But the margins on these results isn’t sufficient for Megaport to break even on EBITDA in FY22. The broker says Megaport has to generate a gross profit margin of about 74% on 2H FY22 revenue to break even. And it doesn’t think it can get there.

In a note, Jefferies retains its neutral stance on Megaport and cuts its share price valuation by more than 3% to $15.10.

Meanwhile, analysts at Macquarie are heavily bullish on Megaport. It’s their top pick in the Australian tech universe.

In a note, the broker discussed the ASX tech sector and says it is shifting focus to more defensible names. It notes that Megaport’s margin run rate surpassed its revenue growth for the quarter, which boosted earnings.

Macquarie analysts are attracted to the company’s virtual-edge connectivity pipeline. They say this could potentially provide a stronger growth stream for Megaport than its cloud router segment. It lifted its target on the Megaport share price by 5% to $21 and urged clients to buy with an outperform rating.

JP Morgan and Morgans reduced their share price targets by 3% and 12% respectively after Megaport’s update.

Megaport share price snapshot

In the past 12 months, the Megaport share price gained 3.3%. The S&P/ASX 200 Index (ASX: XJO) gained 6%.

Year-to-date, Megaport is down 23.4% while the broader index is down 4.2%.

The post Are Megaport (ASX:MP1) shares a buy after smashing earnings? See what these brokers say appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: NAB impresses, ASX CEO to retire before CHESS replacement completes
• What are brokers expecting for ASX tech shares this earnings season?
• What’s got ASX 200 tech share Megaport (ASX:MP1) marching higher today?
• Own Megaport (ASX: MP1) shares? Here’s what to watch when the company reports tomorrow
• 2 excellent ASX growth shares analysts rate very highly

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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As an ASX bank share, and a big four bank at that, the Westpac Banking Corp (ASX: WBC) has a certain reputation as a company that pays out hefty dividends. That’s despite Westpac serving up one of the worst years in terms of dividend payments in its history back in 2020. Due to the impacts of the onset of the coronavirus pandemic, Westpac was forced to skip one of its two biannual dividend payments entirely. That was the first time in decades Westpac missed a payment.

But now that 2020 is well and truly in the rear-view mirror, how is 2022 shaping up for Westpac dividends? Will this ASX bank give investors a dividend pay rise this year?

Well, let’s first check out Westpac’s recent dividend history.

So as we just discussed, 2020 was an awful year for income investors of Westpac. The bank paid out a sole, final dividend of 31 cents per share, fully franked. That compared very poorly with 2019’s final dividend of 80 cents per share, and even worse against 2018’s corresponding 94 cents per share dividend. But such was the impact of COVID, as well as a few other issues Westpac was dealing with at the time.

But last year saw the wheels start to hit the road again. Westpac was back to two dividend payments. Those were an interim dividend of 58 cents per share, and a final dividend of 60 cents per share, both fully franked.

Those two payments give the Westpac share price a trailing yield of 5.25% on current pricing. That happens to be the largest trailing yield out of any of the big four ASX banks right now.

What will Westpac’s next dividends look like?

But what does the future hold for Westpac’s dividend? Well, we of course don’t yet know for sure. But we can look at what one ASX investing expert is pencilling in.

Investment bank and broker Goldman Sachs is currently neutral on Westpac shares, albeit with a 12-month share price target of $26.24 a share, implying a potential upside of almost 17% over the next year.

But Goldman is also predicting a total of $1.22 in dividends per share for FY2022. That implies it is expecting Westpac’s first dividend of 2022 to come in at 62 cents per share. For FY2023, Goldman is anticipating a total payout of $1.29 per share, which would presumably see another hike when Westpac announces its final dividend for 2022 later this year. For FY2024, Goldman is expecting yet another dividend hike, this time to $1.46 a share. That would imply a forward dividend yield of 6.5% on current pricing.

So that’s what one expert has predicted will come to pass for the Westpac dividend. No doubt shareholders will be pretty pleased with those payouts if they do come to pass. We’ll have to wait and see what Westpac pulls out of its hat though.

At the current Westpac Banking Corp share price, this ASX 200 bank has a market capitalisation of $82.43 billion.

The post Will Westpac (ASX:WBC) shares give ASX 200 investors a dividend raise in 2022? appeared first on The Motley Fool Australia.

More reading

• Rising tide? Here’s why ASX 200 bank shares are having such a good run today
• ‘Future-ready’: Westpac (ASX:WBC) share price lifts following Microsoft partnership
• Here’s why the Westpac (ASX:WBC) share price isn’t a value trap
• Expert tips 3 leading ASX 200 shares to buy on the dip
• ANZ (ASX:ANZ) share price on watch following first quarter update

Motley Fool contributor Sebastian Bowen 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 Bruce Jackson.

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Motley Fool Australia Chief Investment Officer Scott Phillips joined Nine’s Late News on Wednesday night to discuss the monster profit result from Commonwealth Bank of Australia (ASX: CBA), Twiggy Forrest’s Fortescue Metals Group Limited (ASX: FMG) to invest $10 billion in Australia’s largest renewable project and consumer confidence takes a dip.

The post CBA’s stunning profit, Fortescue investing $10b in renewables. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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• CBA (ASX:CBA) boss Matt Comyn sounds warning on interest rate hikes
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• Why CBA, Computershare, Dicker Data, and Temple & Webster shares are on fire today

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Commonwealth Bank of Australia (ASX: CBA) CEO Matt Comyn is keeping an eye on the Reserve Bank of Australia (RBA).

That’s because Australia’s booming housing market is heavily reliant on debt. And this debt has been more easily serviced in recent years than at any other time in history, thanks to record low interest rates.

While mortgage rates charged by the big banks like CBA obviously run a bit higher, the RBA’s official cash rate stands at a rock bottom 0.10%.

So far the central bank has held fire on raising the cash rate. But with inflation creeping higher and leading central banks across the world signalling multiple hikes this year, the RBA is widely expected to begin tightening its policies as well.

Why CBA’s Comyn urges restraint

CBA forecasts that the Aussie economy will continue to perform strongly through 2023, or beyond.

According to Comyn (quoted by the Australian Financial Review):

We have the lowest unemployment rate in 13 years, and are going to touch on the lowest unemployment rate since the early 70s later this year. They are a very strong set of economic conditions showing Australia is performing well, and a good set of conditions for the Commonwealth Bank.

With these strong conditions in mind for the year ahead, CBA expects inflation to run in the range of 3–3.5%, which is above the RBA’s target of 2–3%.

To keep inflation in check, Comyn believes the RBA will raise the cash rate to 0.75% by the end of 2022 and ratchet it up to 1.25% later into 2023.

Noting that higher rates could put some mortgage holders under stress, Comyn is cautioning the RBA to raise rates in a “gradual and modest” way.

Interest rates and house prices

Comyn said if the RBA takes this approach there would only be small falls in Australia’s house prices in 2023. But he cautioned that rapid, higher increases in the cash rate could hit the economy and home prices harder.

The CBA boss said that under the gradual approach (increasing the cash rate to 0.75% in 2022 and 1.25% in 2023) house price growth will decline to 4–7% in 2022 and then prices will fall 5–10% in 2023. Those figures, he said, “shouldn’t give our customers too much cause for concern”.

So what should property owners and investors expect?

According to Comyn (quoted by the AFR):

We think rates will go up quite slowly. We expect the strong economic momentum to carry through to at least the end of 2023 and feel very optimistic about the outlook for the Australian economy over this period…

Even if the cash rate increases by say 100 basis points over the next year or year-and-a-half, the increase in the repayment amount will be modest compared to what we have seen on other cycles.

CBA share price snapshot

CBA shares have slightly outperformed the S&P/ASX 200 Index (ASX: XJO) in 2022.

Year-to-date the CBA share price is down 3% compared to a 4% loss posted by the ASX 200.

The post CBA (ASX:CBA) boss Matt Comyn sounds warning on interest rate hikes appeared first on The Motley Fool Australia.

More reading

• Broker upgrades CBA (ASX:CBA) shares to buy rating following ‘great’ half
• Why CBA, Computershare, Dicker Data, and Temple & Webster shares are on fire today
• Here’s what you need to know about the CBA (ASX:CBA) $2 billion share buyback
• Rising tide? Here’s why ASX 200 bank shares are having such a good run today
• Everything you need to know about the CBA (ASX:CBA) interim dividend

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 Bruce Jackson.

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Pilbara Minerals Ltd (ASX: PLS) has been an ASX lithium share on a mission over the past 2 years. Most investors have checked out the Pilbara Minerals share price at some point — perhaps due to its eye-catching volatility, an enthusiastic shareholder base, or purely due to its eye-watering gains.

Let’s dig in and find out exactly what it’s been like for ASX investors holding Pilbara Minerals over the past two years.

So, Pilbara is a lithium producer, and one of the largest on the ASX. Its primary project is the Pilgangoora Operation, located in Western Australia.

This mine is owned in full by Pilbara, which describes it as “the world’s largest independent hard-rock lithium operation”. In addition to producing spodumene, a type of lithium ore, it also produces tantalum, another rare metal.

The Pilbara Minerals share price history has been marked by several periods of breathtaking gains. Back in 2017, when there was a surge in interest for ASX lithium shares, the company’s shares rose from 36 cents in early September to $1.11 by early January 2018. That was an increase of more than 200% over just four months.

But between January 2018 and the middle of 2020, Pilbara shares were caught in what could be called a ‘funk’. Over that period, the Pilbara Minerals share price lost close to 80% of its value.

How rich have Pilbara shares made its ASX investors?

It’s been an entirely different tale since then. Pilbara last bottomed out at around 15 cents per share in late March 2020. This was a consequence of the savage bear market that the coronavirus pandemic elicited at the time.

Compare that to the new record high that the Pilbara Minerals share price reached less than a month ago. On 18 January, Pilbara shares hit a new high of $3.89. That represents an eye-popping gain of 2,493%. Even on today’s pricing at $3.40 a share, this still represents a gain of more than 2,000% since early January 2020.

Here’s a look at that overall journey in visual form compared to the S&P/ASX 200 Index (ASX: XJO).

Let’s put those gains into a monetary form. If an ASX investor ploughed, say, $12,000 into Pilbara shares in March 2020, they would have picked up approximately 80,000 shares. On 18 January 2022, those 80,000 shares would have been worth no less than $311,200. Today, they would be worth $272,000 at the current Pilbara Minerals share price.

So that’s how rich Pilbara has made ASX investors over the past two years. But of course, that’s assuming almost perfect market timing, which is extremely difficult to achieve.

ASX investors who bought Pilbara Minerals within the last couple of months have also enjoyed some very pleasing share price gains, albeit to varying degrees. Since 1 December, the shares have gone up by 30%.

So Pilbara is an ASX share that has proved to be a big winner in recent times. No doubt shareholders will be hoping the party continues.

At the current Pilbara Minerals share price, this ASX 200 lithium producer has a market capitalisation of $10.12 billion.

The post Here’s how rich Pilbara Minerals (ASX:PLS) shares have made ASX 200 investors over the past 2 years appeared first on The Motley Fool Australia.

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• These 3 ASX 200 shares are topping the volume charts this Thursday
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Motley Fool contributor Sebastian Bowen 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 Bruce Jackson.

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It’s been a big week of news for Tritium DCFC Ltd (NASDAQ: DCFC), and today is no different.

While most of Australia slept last night, the Brisbane-based designer and manufacturer of electric vehicle fast chargers saw its stock take off, gaining 64.57% in Wednesday’s session.

That’s on top of Tuesday’s 40% gain. As of Wednesday’s close, which occurs on Thursday morning AEDT, the Tritium share price is US$15.70.

However, it’s dropped 8% in after-hours trading.

Let’s take a look at what’s been driving the Tritium share price and the company’s future plans.

What’s electrifying the Tritium share price this week?

As The Motley Fool Australia reported yesterday, Tritium CEO Jane Hunter met with United States President Joe Biden on Tuesday to announce a new manufacturing facility to be built in Tennessee.

The facility will produce 10,000 electric fast chargers each year, with the capacity to produce up to 30,000 annually.

The news came as President Biden announced that US$5 billion of a US$7.5 billion fund package will be dispatched to states this week.

The funds will go towards installing what he says will be “a national network of electric vehicle chargers” across the United States.

What’s next for Tritium?

Tuesday’s news is just the start of what could become a series of exciting updates to boost the Tritium share price.

The company is expecting production at its new Tennessee facility to begin in the September quarter of 2022. Hunter said the facility will help Tritium double or triple its United States production in the United States.

Tritium also said it’s planning to announce the expansion of its European manufacturing capacity in 2023. It will do so either through expanding its existing facilities or establishing new facilities.

Additionally, it announced that preliminary figures show 43% of its 2021 revenue came from the United States. Another 43% came from Europe.

For comparison, for the 12 months ended 30 June 2021, 23% of Tritium’s revenue came from the United States while 68% came from Europe.

The post Zip! Tritium (NASDAQ:DCFC) share price rockets another 65%. What’s next? appeared first on The Motley Fool Australia.

More reading

• Tritium (NASDAQ:DCFC) share price rockets 39% on what Biden describes as ‘great news for the planet’
• Why did the Tritium (NASDAQ:DCFC) share price just leap 7%?
• Here’s how Tritium (NASDAQ:DCFC) has been performing since listing in the US

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 Bruce Jackson.

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ASX tech shares have been punished in the last two months amid a wide sell-off in high-growth stocks.

While investors have thrown support behind the ASX tech sector this week, it remains downbeat for the year. The S&P/ASX All Technology Index (ASX: XTX) is up more than 4% since Friday’s close. However, it has slipped around 8% in the past month and 12% this year.

As a result, the Australian tech sector has collapsed 17% over the past 12 months, making it one of the worst-performing sectors in that time.

With earnings season in full swing, many of the Aussie tech names are on the block as investors begin to peel back the layers on company fundamentals with the market volatility.

Analysts at Macquarie have done just that in a recent note, having scrutinised a few key ASX tech shares in the process. Let’s take a look.

What’s the outlook for ASX tech shares in 2022?

Macquarie has taken note of the recent downturn in the ASX tech basket and is now tilting its posture towards more defensible names.

In fact, the broker is downbeat on the upcoming round of earnings reports from Australian tech stocks. It reckons the sector will display an underwhelming set of results, given the challenges posed by COVID-19 and the Omicron variant.

It notes its favourite pick among the tech stocks, Megaport Ltd (ASX: MP1), has lost around 33% of its value in the past few months after melting off a previous high of $21.88 back in November.

However, with the release of Megaport’s fairly robust earnings yesterday, shares have popped from a low of $13.25 and are now trading 11% higher at $14.68 apiece.

The broker also likes independent data store operator NextDC Limited (ASX: NXT) on a number of fronts and rates it a buy to clients, valuing the company at $16 per share.

On the other hand, Macquarie has reservations on a number of other ASX tech shares. It notes that, as an aggregate, its internal revenue and earnings before interest, taxes, depreciation, and amortisation (EBITDA) forecasts for the sector are now 5%–7% below consensus estimates.

Specifically, the broker is bearish on Altium Limited (ASX: ALU), Appen Ltd (ASX: APX), and Xero Limited (ASX: XRO), valuing each of these stocks at $27.10, $9.50, and $130 per share respectively.

For each of these names, these price targets represent considerable downside potential, Macquarie says.

One smaller ASX tech share Macquarie is also bearish on is Nearmap Ltd (ASX: NEA), rating it to underperform with a $1.30 per share price target.

Fellow broker Citi holds the opposite side of the coin in Appen’s case, rating the artificial intelligence data services company to outperform in 2022. It values the company at $8.66 per share in a recent note to clients.

Funnily enough, Citi also recommends Macquarie Group Ltd (ASX: MQG) shares are a buy right now and sees the company is worth north of $225 per share.

So far this year to date, both Nearmap and Appen are trading well below the tech sector, whereas Xero and NextDC are tracking largely in line with the index, as shown on the chart above.

Megaport and Altium are the star performers among ASX tech shares in the last 12 months judging from this data.

The post What are brokers expecting for ASX tech shares this earnings season? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: NAB impresses, ASX CEO to retire before CHESS replacement completes
• 3 buy-rated ASX 200 shares with plenty of upside potential
• Top brokers name 3 ASX shares to buy today
• Show me the money! Why Xero (ASX:XRO) shares don’t pay a dividend
• Is the ASX value shares party just getting started?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Altium, Appen Ltd, MEGAPORT FPO, Nearmap Ltd., and Xero. The Motley Fool Australia owns and has recommended Appen Ltd, Nearmap Ltd., and Xero. The Motley Fool Australia has recommended MEGAPORT FPO and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Argosy Minerals Ltd (ASX: AGY) share price is edging higher on Thursday following a positive update from the company.

At the time of writing, the lithium miner’s shares are up 1.30% to 39 cents.

What did Argosy announce?

In today’s statement, Argosy advised it has received regulatory approval of its Environmental Impact Assessment (EIA) report.

This allows the company to conduct resource expansion exploration and production well drilling works at the Rincon Lithium Project.

As such, focus will be on increasing the current JORC Indicated Mineral Resource estimate by targeting the defined exploration target.

It is estimated that 262,000 tonnes to 479,000 tonnes of lithium carbonate are currently below the ground level.

Together, the JORC Indicated Mineral Resource and Exploration Target estimate a potential 507,000 tonnes to 724,000 tonnes of lithium carbonate.

Argosy stated that production well drilling works will commence later this year in facilitating the preparation of a Mineral Reserve Estimate. This will follow the subsequent completion of the Feasibility Study.

Exploration drilling will focus on confirming the geology, yield and brine grade over the depths of up to 300 metres.

Argosy managing director, Jerko Zuvela commented:

This is another significant milestone for the Rincon Lithium Project and provides further support to realise the substantial resource expansion potential upside that exists below the shallow-depth current Indicated Mineral Resource.

In addition, advancing works toward a maiden reserve estimate and then feasibility study for the planned larger scale operation greatly enhances the long-term viability and status of our project.

Argosy share price summary

Over the past 12 months, Argosy shares have stormed 105% higher, with year to date up 22% so far.

Based on today’s price, Argosy commands a market capitalisation of roughly $502.36 million and has approximately 1.29 billion shares outstanding.

The post Argosy (ASX:AGY) shares climb on ‘significant milestone’ at Rincon appeared first on The Motley Fool Australia.

More reading

• Argosy (ASX:AGY) share price powers up on lithium project update

Motley Fool contributor Aaron Teboneras owns Argosy Minerals Limited. 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 Bruce Jackson.

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Shares in National Australia Bank Ltd. (ASX: NAB) are cruising higher today to now trade 4% higher at $29.46 apiece.

Investors are reeling from the release of the banking major’s first quarter results yesterday, where the outcomes was better than many were expecting.

Analysts at the various investment banks are reeling too and have updated clients on their outlook on NAB shares in 2022. Let’s take a closer look.

What are analysts saying on NAB shares?

One theme that’s been plaguing the ASX banking sector in 2022 is the prospect of the large banking majors and their smaller counterparts’ net interest margins (NIMs) contracting heavily this year.

It’s widely accepted that NIMs will contract this year across the board in ASX banks, but the question is more about who will fare the best as this happens.

Analysts at JP Morgan note that NAB is holding its NIM line better than its competitors, noting the bank’s firm result of just a 5 basis points (0.05%) decrease in margin for Q1.

NAB’s decision to focus on lower funding costs is also offsetting the headwinds faced by competition in the mortgage market and the loan-type mix faced by other banks.

JP Morgan explains that NAB’s cash net profit after tax (NPAT) of $1.8 billion shows it running at the right cadence to meet its first half profit guidance of $3.2 billion.

“This is an outstanding revenue trajectory in the context of recent peer results and our forecasts, demonstrating a franchise that is delivering in both the mortgage and business markets” the broker remarked.

Meanwhile, analysts at Citi were also impressed by the bank’s quarterly results, particularly the 12% growth in cash earnings that were 10% ahead of consensus estimates.

According to Citi analysts, NAB’s quarterly results show the key differentiators that investors should consider compared to the other banks – particularly as revenue growth was 8% above the average this quarter.

“While this benefited from a rebound in markets and treasury, underlying growth was still a peer-leading 5%” Citi noted in its update to clients.

“Overall, we expect consensus upgrades likely from the better revenue result, and think the stock will be well supported given profit momentum and NIM pressures at peers” it said.

UBS analysts are also bullish on NAB and value the bank at $30.50 per share. The Swiss investment bank noted the earnings beat could lead to a flurry of analyst upgrades in response.

“In our view, NAB’s Q1 trading update and operating performance is well ahead of consensus at a pre-provision operating level, so this update is likely to drive consensus earnings upgrades” the broker said.

A summary of NAB shares

In the last 12 months, NAB shares are up 17% and have gained more than 1% this year to date. They have struggled in the past month however, sliding less than 1% in the red.

At the time of writing NAB has a market capitalisation of over $92 billion and trades on a price to earnings (P/E) ratio of 14.7x.

The post Shareholders are happy with the NAB (ASX:NAB) earnings beat. But what do analysts say? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: NAB impresses, ASX CEO to retire before CHESS replacement completes
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Motley Fool contributor Zach Bristow 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 Bruce Jackson.

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