Is the Westpac (ASX:WBC) share price in the buy zone?

Here’s what this broker thinks about this banking giant…
The post Is the Westpac (ASX:WBC) share price in the buy zone? appeared first on The Motley Fool Australia. –

The Westpac Banking Corp (ASX: WBC) share price is under pressure on Friday.

In afternoon trade, the banking giant’s shares are down 1% to $25.28.

Is the weakness in the Westpac share price a buying opportunity?

One leading broker that believes the weakness in the Westpac share price is a buying opportunity is Morgans.

This morning the broker has updated its forecasts, resulting in its analysts retaining their add rating and $29.50 price target.

Based on the latest Westpac share price, this implies potential upside of almost 17% over the next 12 months. And with Morgans forecasting a dividend yield of 4.5% over the same period, this potential return stretches beyond 21%.

What did the broker say?

Morgans has updated its forecasts to reflect the sale of its Westpac Life New Zealand business and potential fraud provisions relating to Forum Finance.

While this has resulted in a 2% reduction in its FY 2021 earnings estimates, its longer term forecasts are not materially impacted.

Morgans said: “WBC has also said that it has a potential exposure of ~$200m after tax to Forum Finance, with the extent of any loss dependent on the outcome of its investigations and recovery actions underway.

”We understand that the recovery process may play out over a prolonged period, and we therefore expect WBC to raise an individually assessed provision of ~$290m for the full exposure to Forum Finance in 2H21F. However, we see potential for this provision to be partially written back over time,” it added.

“We have reduced our FY21F cash EPS by 2% as a result of the higher credit impairment charge stemming from the Forum Finance exposure. We have not materially changed our cash EPS forecasts for the outer years,” Morgans concluded.

The post Is the Westpac (ASX:WBC) share price in the buy zone? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Westpac right now?

Before you consider Westpac, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Westpac wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

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The Westpac (ASX:WBC) share price is up 30% in 2021
Why analysts love Westpac (ASX:WBC) and this ASX 200 dividend share
NAB (ASX:NAB) share price up following prediction of no rate hike until 2024
Westpac (ASX:WBC) share price in focus after fraud latest

Motley Fool contributor James Mickleboro owns shares of 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 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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