The Suncorp Group Ltd (ASX: SUN) share price has been out of form in recent weeks following a disappointing insurance claims update.
Since this time last month, the banking and insurance giant's shares have fallen 12% to $11.23.
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Is the Suncorp share price in the buy zone?
The team at Citi appear to believe that recent weakness in the Suncorp share price is a buying opportunity for investors.
Following Suncorp's banking update earlier this week, the broker retained its buy rating and $12.80 price target on the company's shares.
Based on the current Suncorp share price, this implies potential upside of 14% for investors over the next 12 months.
In addition, Citi is forecasting a fully franked 56 cents per share dividend in FY 2022. If you include this, the total return stretches to an even more attractive 19%.
What is the broker saying?
Citi was pleased with the performance of Suncorp's banking business during the first quarter.
It commented: "SUN's APS 330 release shows improving momentum in its home loan portfolio offering initial signs that its new growth strategy is beginning to work, albeit growth is below system and there is still a long way to go. A small specific provision release also helped the quarter with the collective provision untouched and still seemingly conservative ahead of a promised review at 1H22, albeit the FY review may be more significant. While we remain sceptical the bank can achieve its targeted 50% FY23 cost to income ratio, this quarter is a mildly encouraging one with digital transactions also increasing."
The broker also feels that the current Suncorp share price could be an attractive entry point for investors.
"While we still see SUN as more of a medium term than shorter term story, our analysis suggests the current share price is a reasonable entry point even so. Largely to reflect lower impairment charges, we nudge up our FY22E EPS by 1% and retain our Buy call and A$12.80 TP," it concluded.
