Three of the big four banks have pushed higher in morning trade with the Westpac Banking Corp (ASX: WBC) share price the only one to have dropped into the red.
At the time of writing the Westpac share price is down slightly to $30.15.
Why are its shares heading lower today?
With no news out of Australia's oldest bank today, it seems likely that this decline can be attributed to a broker note out of Morgan Stanley.
According to that note, analysts at the investment bank have downgraded Westpac's shares to an equal-weight rating from overweight. This rating change is the equivalent of going from buy to neutral.
Furthermore, the broker has cut the price target on the banking giant's shares from $32.10 to just $30.00.
Morgan Stanley has made the move over concerns that Westpac's margins may have now peaked. Two reasons for this in particular are its belief that that the capital intensity of its retail bank business is increasing and that there is little room any surprise in cost savings.
What about the other banks?
Morgan Stanley is actually quite bearish on the banking industry as a whole and not just Westpac.
The broker currently has underweight ratings on the shares of Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB), and an equal-weight rating on the shares of Australia and New Zealand Banking Group (ASX: ANZ).
What now?
Whist I think Morgan Stanley has a point, I'm a little more bullish on the banks than it is and think that Westpac would still be a great investment option in the $30 to $31 share price range.
Especially given its generous divided yield. At present the bank's shares provide a trailing fully franked 6.2% dividend, well ahead of the market-average yield of 4%. I expect this strong yield to offer some support to its share price over the coming 12 months.
