Westpac (ASX:WBC) share price rises after broker tips $5bn buyback

The Westpac Banking Corp (ASX: WBC) share price is back on form on Wednesday. In afternoon trade, the banking giant's …

| More on:
A woman leans forward with her hand behind her ear, as if trying to hear information.

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 Westpac Banking Corp (ASX: WBC) share price is back on form on Wednesday.

In afternoon trade, the banking giant's shares are up almost 1.5% to $25.80.

Why is the Westpac share price rising today?

Investors have been bidding the Westpac share price higher after a leading broker spoke positively about its third quarter update.

According to a note out of Goldman Sachs, its analysts have retained their buy rating and lifted their price target on bank's shares to $29.93.

Based on the current Westpac share price, this implies potential upside of 16% over the next 12 months before dividends.

Furthermore, Goldman has held firm with its dividends per share forecast of 116 cents in FY 2021 but increased its FY 2022 forecast to 128 cents and FY 2023 forecast to 141 cents. This implies yields of 4.5%, 5%, and 5.5%, respectively.

But perhaps the biggest positive is that the broker believes Westpac could announce a $5 billion off-market share buyback with its full year results later this year. This follows similar moves by its rivals.

What did the broker say?

Goldman commented: "WBC's Jun-21 (3Q21) Pillar 3 update highlighted that its asset quality and capital trends were run-rating broadly in line with our prior 2H21E expectations. That said, management's explicit commentary around its surplus capital and franking position, which will see the Board consider a return of capital, with an update at its FY21 results, does bode well for the timing of potential capital management."

"We move our FY21E/22E/23E EPS by +0.7%/+4.3%/+7.2%, driven by i) improved balance sheet momentum, ii) lower 2H21E BDDs, and iii) our assumption of an A$5bn off-market buyback in light of its surplus capital and franking, partially offset by iv) lower NIMs, and vi) higher near term expenses," it added.

Overall, the broker continues to see a lot of value in the Westpac share price at the current level. It also believes the risks are to the upside for its earnings. Especially given management's bold cost reduction targets.

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.

More on Bank Shares

A woman in a bright yellow jumper looks happily at her yellow piggy bank.
Bank Shares

$10,000 invested in CBA shares in FY25 is now

Let's see whether it was a successful 12 months for bank investors in the last financial year.

Read more »

Woman with spyglass looking toward ocean at sunset.
Bank Shares

What could happen to the big 4 banks in FY26?

What’s in store for the big four banks over the next 12 months?

Read more »

Bank building in a financial district.
Bank Shares

Which is the only ASX 200 bank stock Macquarie expects to outperform in FY 2026?

Macquarie forecasts a tough year ahead for the ASX 200 banks, with only one expected to outperform.

Read more »

a couple and their baby sit together at their computer carrying out digital transactions and smiling happily.
Bank Shares

Is the NAB share price a buy for passive income?

Should investors buy into this major bank for income?

Read more »

A man in a suit smiles at the yellow piggy bank he holds in his hand.
Bank Shares

Fresh high of $192: Here's how many records CBA shares have hit in 2025

CBA's record count for 2025 is getting ridiculous.

Read more »

executive in shirt and tie holding chin in hand looking disappointed because of slashed dividend payouts
Bank Shares

Is a dividend cut coming for ANZ shares?

ANZ's high dividend yield might not last...

Read more »

A graphic showing a businessman running up a white upwards rising arrow symbolising the soaring Magellan share price today
Share Gainers

CBA shares hit another all-time high. Can they surpass $200 in 2025?

CBA shares have a tailwind pushing up their price that has nothing directly to do with the bank's business performance.

Read more »

A hip young man with a beard and manbun sits thoughtfully at his laptop computer in a darkened room, staring at the screen with his chin resting on his hand in thought.
Bank Shares

Should I buy JP Morgan or CBA shares?

CBA shares hit another new all-time high today.

Read more »