市场见解

Is it a buy? Here’s what Macquarie is saying about the Westpac (ASX:WBC) share price

Shares in Westpac Banking Corp (ASX: WBC) finished up the trading day on Thursday less than 1% in the red …
The post Is it a buy? Here’s what Macquarie is saying about the Westpac (ASX:WBC) share price appeared first on The Motley Fool Australia. –

Shares in 西太银行 (ASX: WBC) finished up the trading day on Thursday less than 1% in the red at $20.96.

It’s been a choppy week for the bank following its AGM on Wednesday, considering that shareholders gave the board its first strike by rejecting its remuneration proposal.

Yet, in amidst chairman John McFarlane apologising “unreservedly on behalf of the board”, plus the bank’s $8 billion cost reduction target, Westpac shares have held up well this week and are less than 1% down over the past 5 trading days.

The team at Macquarie have now weighed in on the investment debate and offered some insights into the outlook for the bank’s investors. Could Westpac be a buy right now? Let’s take a look and see.

Is Westpac a buy?

Analysts at Macquarie reckon that Westpac is set to lift its performance in FY22 and that revenue growth could be improved next year.

The firm acknowledges Westpac’s net interest margin (NIM) headwinds that have resulted in a number of analyst downgrades and downward revisions on its earnings outlook.

However, Macquarie reckons this period of compressed margins and lumpy revenues could be finished for Westpac, and believes its home loan division will begin to match its peers from FY22.

With the spread between new home loans to existing loans narrowing for Westpac, this could set the stage for an improved growth outlook at the top for Australia’s oldest bank, it says.

In turn, these improving fundamentals could bode in well for Westpac’s share price, according to Macquarie. The firm notes that “while we recognise other challenges, including persistently unrealistic consensus expectations, we see scope for Westpac to unwind some of its recent underperformance”.

Despite its positive tone, the firm remains neutral on its stance and values the bank at $25.50 per share, implying around a 22% upside potential.

What are other brokers saying?

Meanwhile, the team at Bell Potter also hold a neutral sentiment on the outlook of the Westpac share price. In a recent note, the broker – like many of its colleagues – reckons Westpac’s ambitious cost reduction of $5 billion by 2024 is a mighty task.

Following the bank’s AGM, Bell Potter says Westpac might have some room to grow in its transformation before it books ongoing revenue growth.

It says that “while profit increased mainly due to an easing off in Covid-19 issues, there is still a lot of work to be done in driving change”.

Bell Potter goes on to note the regulatory challenges Westpac has faced this year alongside its time spent on remediating customer issues and risk budgeting, alongside a shift in strategy.

As such the broker rates Westpac neutral and assigns a $22 price target on its share price, a step in behind Macquarie’s valuation.

In the past 12 months the Westpac share price has gained just 4% after climbing more than 8% this year to date. Over the past month, shares have reversed course and are down 8% in that time.

The post Is it a buy? Here’s what Macquarie is saying about the Westpac (ASX:WBC) share price appeared first on The Motley Fool Australia.

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The author has no positions 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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