市场见解

Is the Westpac (ASX:WBC) share price still good value?

The Westpac Banking Corp (ASX: WBC) share price has started the week in a subdued fashion. In afternoon trade, the…
The post Is the Westpac (ASX:WBC) share price still good value? appeared first on The Motley Fool Australia. –

The 西太银行 (ASX: WBC) share price has started the week in a subdued fashion.

In afternoon trade, the banking giant’s shares are down slightly to $25.59.

Is the Westpac share price in the buy zone?

A number of brokers have been giving their verdict on the Westpac share price following its announcement of potential fraud last week.

In case you missed it, Australia’s oldest bank revealed that it has commenced proceedings in the Federal Court of Australia against equipment leasing firm Forum Finance. This follows the discovery of significant potential fraud relating to a portfolio of equipment leases with Westpac customers arranged by Forum Finance, which were referred to Westpac’s Institutional Bank.

Westpac estimates that it has a potential exposure of around $200 million after tax. Though, it warned that the extent of any loss is dependent on the outcome of its investigations and recovery actions that are underway.

How did brokers respond?

Analysts at Ord Minnett didn’t respond positively to the news. They have held firm with their hold rating and $27.50 price target. The broker feels the development reflects poorly on the bank’s internal risk controls.

Analysts at Citi have been a little more forgiving, noting that fraud is an industry risk that can never be fully eliminated.

And despite downgrading its earnings estimates to reflect the news, it remains positive and has retained its buy rating and $29.50 price target.

Based on the current Westpac share price, this implies potential upside of 15% over the next 12 months excluding dividends. This potential return stretches to almost 20% if you include dividends.

Citi commented: “We view WBC’s announcement of a potential fraud relating to a rogue principal/agency agreement as an unfortunate, but likely rare occurrence. While we expect additional information to come to light in time, on first blush it appears a sophisticated fraud by a single entity, a risk in banking which cannot be entirely eliminated.”

“Principal/agency relationships, while a small business for WBC, are common across the industry and hence it is difficult to read much from this announcement into anything highly WBC-specific. We downgrade FY21 earnings by ~3%, but view operational implications as limited, and keep WBC as our top pick,” it concluded.

The post Is the Westpac (ASX:WBC) share price still good value? appeared first on The Motley Fool Australia.

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

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More reading

ASX 200 Weekly Wrap: ASX finishes FY21 on a high

Top brokers name 3 ASX shares to buy next week

ASX 200 up, Westpac caught in potential fraud, RPMGlobal rises

ASX blue chips set to unleash buybacks and dividends! But which is better?

Westpac (ASX:WBC) share price lower after revealing $200m potential fraud

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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