What these top brokers are saying about the Westpac (ASX:WBC) share price

These experts have voiced their opinion on what investors should look out for.

| More on:
A young boy wearing a red blindfold knocks the stuffing out of a pinata.

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 edging lower in afternoon trade. Westpac shares are now changing hands at $25.26.

This continues its struggles over the past month. Over that period Westpac shares are 1.46% in the red.

What's up with the Westpac share price lately?

Westpac shareholders have been sailing choppy seas over the last few weeks. They have been watching their shares trade in a range of $24.91 to $26 since 16 September.

The company took a hit at the time, on the back of a third rates cut it made to its savings account products.

The banking giant trimmed the interest rates on its LifeSavings products by 0.5% for some account holders, and 0.1% for all others.

Investors punished the company on the back of the news, sending its share price 4% lower the following week.

After making a swift recovery to its former highs, the Westpac share price took another hit on 11 October. The company announced a series of items that are set to impact its performance in the second half.

These "notable items" will set the banking giant back $1.3 billion on its net profit and cash earnings guidance for H2 2022, according to the company.

Specifically, the impairments comprise a blend of asset writedowns in its institutional banking unit ($965 million); provisions for liabilities such as refunds and litigation ($172 million); and transaction costs associated with recent divestments ($291 million combined).

Westpac understands this will have a net 15 basis point effect on its CET 1 capital ratio requirements.

Will these headwinds continue to plague the company? These leading brokers have weighed in on the debate to offer their opinion on the Westpac share price.

Can Westpac rebound from these pressures?

Analysts at investment bank Macquarie Group think it might not be such smooth sailing for Westpac to get out of the current situation.

The broker was curious about Westpac's decision to write down the value of its institutional banking unit's goodwill as part of its earnings management.

Macquarie does note, however, that Westpac's earnings have been on the slide over several periods. It reckons "earnings are likely to remain under pressure" for the company.

Morgan Stanley's investment crew has also weighed in. They say Westpac's earnings down step was substantially larger than its internal forecasts of $261 million.

The broker looks at Westpac's FY22 earnings guidance and off-market buyback as key inflection points for Westpac's share price. Morgan Stanley has wound back its price target by 1% to $28.90.

Despite this, it maintains an overweight rating on the company's shares.

Finally, leading broker Citi has chimed in and believes Westpac's announcement could be a roadblock for the company's management outfit.

This is especially true given Westpac management's efforts to re-establish credibility and lay out its growth vision for the future, Citi says. Citi downgrades its modelling by $1.3 billion, or 20%, as a result.

Westpac shares are up 31% this year to date, after sliding 2% into the red this past week of trading.

The author Zach Bristow 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 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 Financial Shares

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Financial Shares

Forget CBA, Macquarie is tipping a 40% return for this ASX financial stock

Let's see why this stock could be a better buy than Australia's largest bank.

Read more »

A group of stockbrokers sit in a room with several computer screens in front of them as they discuss the Zip share price and Zip's merger with Sezzle
Financial Shares

Up nearly 60% in a year, can Netwealth shares go higher?

Netwealth shares are up more than 200% over the past 5 years.

Read more »

Man smiling at a laptop because of a rising share price.
Financial Shares

Macquarie places 'outperform' rating on this ASX All Ords financial services stock

This financial services stock seems to be going from strength to strength.

Read more »

Woman and man calculating a dividend yield.
Financial Shares

Australian insurance sector: Does Macquarie prefer IAG or Suncorp shares?

Here’s an expert’s views on the insurance sector.

Read more »

A woman sits on a chair smiling as she shops online.
Financial Shares

Which ASX 200 financial share delivered better returns in FY25: IAG, AMP, or Zip?

We compare share price movements and dividend payments for these 3 ASX 200 financial stocks.

Read more »

a man sits in unhappy contemplation staring at his computer on his desk in a home environment, propping his chin on his hand.
Financial Shares

Did Suncorp or QBE insurance shares perform better in the last year?

These insurance providers brought solid returns for investors in the last 12 months. 

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Financial Shares

Up 58% since April, this ASX 200 financial stock just reported record results

The ASX 200 wealth management and technology company has been on a tear since April. Here’s the latest.

Read more »

A young woman smiles as she rides a zip line high above the trees.
Financial Shares

5 best ASX 200 financial shares of FY25 (CBA didn't make the cut!)

These stocks were well and truly 'in the black' for share price growth last financial year.

Read more »