This banking giant’s shares are under pressure on Monday…
The post ANZ (ASX:ANZ) share price falls on broker downgrade appeared first on The Motley Fool Australia. –
The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price isn’t having a good start to the week.
In afternoon trade, the banking giant’s shares are down 2.5% to $28.80.
Why is the ANZ share price sinking?
Investors have been selling down the ANZ share price on Monday after it was the subject of a bearish broker note.
According to a note out of Citi, its analysts have downgraded the bank’s shares to a sell rating and cut the price target on them to $28.00.
This implies potential downside of approximately 3% from the current ANZ share price.
Why did the broker downgrade its shares?
The broker made the move on the belief that weakness in its core profits will lead to the bank falling short of expectations during the second half of FY 2021.
Citi expects this to be driven by a sudden and severe downturn in trading conditions for its Markets segment. It notes that this segment has been doing a lot of the heavy lifting in recent halves.
The broker commented: “Recent peer results suggest a sharp reversal of Markets revenues, and we now expect 2H 2021 core profit to miss consensus estimates by 9%.”
Its analysts appear to believe that this will weigh on ANZ’s performance in the near term and have amended their forecasts to reflect this.
Is anyone bullish?
The team at Morgans are much more positive on the ANZ share price. Last week, its analysts retained their add rating and $34.50 price target on its shares. This implies potential upside of almost 20% over the next 12 months before dividends.
Morgans believes there is potential for further capital management by ANZ in the near future. This is on top of the recently announced on-market share buyback of up to $1.5 billion.
It is also forecasting generous dividends in the coming years. Morgans has pencilled in a $1.45 per share dividend in FY 2021 and then a $1.65 per share dividend in FY 2022. Based on the current ANZ share price, this will mean yields of 5% and 5.7%, respectively.
Should you invest $1,000 in ANZ right now?
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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.