The Suncorp Group Ltd (ASX:SUN) share price was on form on Wednesday and has been tipped to go even higher by a leading broker…
The post Can the Suncorp (ASX:SUN) share price go higher from here? appeared first on Motley Fool Australia. –
The Suncorp Group Ltd (ASX: SUN) share price was on form on Wednesday and charged notably higher.
The insurance and banking giant’s shares rose almost 4% to $9.50.
Can the Suncorp share price go higher from here?
According to one leading broker, there could be plenty more upside for the Suncorp share price over the next 12 months.
A note out of Goldman Sachs reveals that its analysts have retained their buy rating and $10.86 price target on the company’s shares following its quarterly update.
This price target implies potential upside of 14% excluding dividends, even after factoring in today’s solid gain.
What did the broker say?
Goldman has been looking through Suncorp’s first quarter banking update and notes that its home lending lodgement and settlement rates have increased as a result of improved processes for the broker channel.
However, this was more than offset by higher levels of customer repayments and refinancing as a result of increased competition across the industry. As a result, its mortgage growth was down 1% quarter on quarter and tracking slightly below Goldman’s half year forecast of -0.5%.
Positively, though, the broker points out that its net interest margin (NIM) has held up much better than regional peers that are experiencing stronger volume growth. It also appears confident this will remain the case throughout the first half.
Another positive was its business volumes. They were up 1.7% on the prior corresponding period thanks largely to Agribusiness growth of 3.7%.
But perhaps the biggest positive of all was its asset quality, which the broker was pleasantly surprised by.
It commented: “Asset quality trends are tracking much better than anticipated, with SUN’s c.A$3m bad debt charge for the quarter trending well below the A$56m we have forecast for 1H21E. With deferral metrics remaining encouraging alongside a broader re-opening of key state economies, asset quality is on track to be a source of upside risk to consensus for FY21E.”
In light of this, it appears comfortable with its buy rating and $10.86 price target at this stage.
Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
*Returns as of 6/8/2020
- Why the AMP (ASX:AMP) share price could be set to rocket higher today
- These could be the next ASX stocks to unlock value by selling assets
- The Suncorp (ASX:SUN) share price is slightly lower on day of AGM
- Invest your Suncorp dividends in these ASX shares today
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.