ANZ (ASX:ANZ) share price falls on broker downgrade

This banking giant's shares are under pressure on Monday…

| More on:
a person in a business suit wipes his forehead with his handkerchief while a red, falling arrow zigzags downwards behind him

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price isn't having a good start to the week.

In afternoon trade, the banking giant's shares are down 2.5% to $28.80.

Why is the ANZ share price sinking?

Investors have been selling down the ANZ share price on Monday after it was the subject of a bearish broker note.

According to a note out of Citi, its analysts have downgraded the bank's shares to a sell rating and cut the price target on them to $28.00.

This implies potential downside of approximately 3% from the current ANZ share price.

Why did the broker downgrade its shares?

The broker made the move on the belief that weakness in its core profits will lead to the bank falling short of expectations during the second half of FY 2021.

Citi expects this to be driven by a sudden and severe downturn in trading conditions for its Markets segment. It notes that this segment has been doing a lot of the heavy lifting in recent halves.

The broker commented: "Recent peer results suggest a sharp reversal of Markets revenues, and we now expect 2H 2021 core profit to miss consensus estimates by 9%."

Its analysts appear to believe that this will weigh on ANZ's performance in the near term and have amended their forecasts to reflect this.

Is anyone bullish?

The team at Morgans are much more positive on the ANZ share price. Last week, its analysts retained their add rating and $34.50 price target on its shares. This implies potential upside of almost 20% over the next 12 months before dividends.

Morgans believes there is potential for further capital management by ANZ in the near future. This is on top of the recently announced on-market share buyback of up to $1.5 billion.

It is also forecasting generous dividends in the coming years. Morgans has pencilled in a $1.45 per share dividend in FY 2021 and then a $1.65 per share dividend in FY 2022. Based on the current ANZ share price, this will mean yields of 5% and 5.7%, respectively.

Motley Fool contributor James Mickleboro has no position 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 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.

More on Bank Shares

Bank building with the word bank on it.
Bank Shares

The biggest buyers and sellers of ASX 200 bank stocks revealed

Macquarie breaks down who’s been buying and who’s been selling the ASX 200 bank stocks.

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Resources Shares

Should I switch my ASX 200 banking stocks for ASX 200 miners before earnings season?

The ASX 200 Index is dominated by Australia's bank and materials/mining sectors, which together account for around half of the…

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Bank Shares

Here's when Westpac says the RBA will now cut interest rates

The RBA surprised everyone by keeping rates on hold last week. So, when will the next cut happen?

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Bank Shares

This is the ASX bank stock with the largest dividend yield right now

Looking to ASX bank stocks for dividend income right now?

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Bank Shares

ASX banking sector: Is it time to consider a regional bank?

The big 4 banks are widely considered to be overvalued.

Read more »

A person leans over to whisper a secret to a colleague during a meeting.
Bank Shares

Here are the latest growth forecasts for the CBA share price

Can the bank continue rising? Here are some expert views.

Read more »

A businessman presents a company annual report in front of a group seated at a table
Bank Shares

Earnings season predictions: Macquarie weighs in on the big 4 banks

What are the broker's predictions?

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Major CBA investor reveals why he's all in

This investor described one major reason driving his investment in CBA shares.

Read more »