Top broker says buy Westpac shares for 'attractive relative value and dividend yield'

Can Westpac go higher?

| More on:
Woman looking at her smartphone and analysing share price.

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

Key points

  • Westpac shares have shed more than 4% in the last month 
  • Multiple analysts recommend Westpac as a buy, however not everyone shares this view 
  • Westpac reported a 22% lift in net profit to $4 billion in the first half of FY23 

Westpac Banking Corporation (ASX: WBC) shares have fallen in the last month, but is this a buying opportunity?

Westpac shares have descended 4.4% from $22.25 at market close on 24 April to $21.26 at the time of writing. For perspective, the S&P/ASX 200 (ASX: XJO) has slipped 0.86% in the same time frame.

Let's take a look at the outlook for this ASX 200 bank share.

Is Westpac a buy?

Westpac shares are a "buy " according to Baker Young managed portfolio analyst Toby Grimm. He noted the company's 2023 half-year result, dividend yield and valuation.

Commenting on The Bull, he said:

This bank has underperformed its major peers by an average of 33 per cent during the past five years. Following a better-than-expected 2023 half year result, we see attractive relative value and dividend yield. 

Cost pressures continue to be a major detractor, but they are a controllable factor.

Westpac reported a net profit of $4 billion in the first half of FY23, up 22% on the prior corresponding half.

The dividend per share, fully franked, lifted 15% on the first half of FY22 to 70 cents per share.

On the flip side, the team at Morgan Stanley has recently slashed Westpac to equal weight. The broker cut its 12-month price target on all of the big four ASX 200 bank shares.

The team cut Westpac's price target to $21, implying a 5.6% downside.

However, Goldman Sachs is still recommending investors buy Westpac shares due to its net interest margin (NIM) and cost outlook. Goldman said:

We view WBC's NIM management in the half as a positive relative to peers, in particular having achieved an exit NIM that was flat versus 2Q23 average in contrast with peers who saw continued deterioration.

Despite WBC walking away from its FY24E cost target of A$8.6 bn, we expect a broadly flat cost trajectory over the next two years, which will see WBC outperform peers in this relatively difficult inflationary environment.

Westpac share price snapshot

The Westpac share price has shed 9% in the last year.

Created with Highcharts 11.4.3Westpac Banking Corporation PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Westpac has a market cap of around $74 billion based on the latest closing share price.

Should you invest $1,000 in Westpac Banking Corporation right now?

Before you buy Westpac Banking Corporation shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Westpac Banking Corporation wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.

More on Bank Shares

A woman works on her desktop and tablet, having a win with crypto.
Bank Shares

Should new investors spend their first $5,000 on the big 4 banks?

New to investing? You might be considering one of Australia’s major banks as your first investment. 

Read more »

Woman calculating dividends on calculator and working on a laptop.
Bank Shares

Buying the dip: $10,000 invested in Westpac and CBA shares at April's lows is now worth…

Investors would have done well to follow Warren Buffett’s advice to be greedy on Westpac and CBA shares in early…

Read more »

Lines of codes and graphs in the background with woman looking at laptop trying to understand the data.
Earnings Results

Westpac share price sinks on half-year results miss

Let's see how the big four bank performed during the first half.

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

Why does Macquarie think the big 4 ASX bank shares are 'on borrowed time'?

With Australian interest rates likely to fall, the banks face compressed margins in the medium term.

Read more »

Bank building in a financial district.
Bank Shares

What happened with the big four ASX 200 bank stocks in April?

CBA led the charge among the ASX 200 bank stocks in April. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Bank Shares

Why did CBA shares jump over 10% in April?

It was a great month for owners of this banking giant's shares.

Read more »

Happy young woman saving money in a piggy bank.
Bank Shares

Which big 4 ASX bank share does Macquarie currently prefer?

Here’s why Macquarie likes this bank the most.

Read more »

Bank building with word Bank on it.
Bank Shares

ASX bank shares outperformed in April. Will this continue according to Macquarie?

What drove the strong performance by banks in April?

Read more »