ANZ Group Holdings Ltd (ASX: ANZ) shares have advanced nearly 7% this year to date – but it hasn't been a linear ascent.
Since February, ANZ has traded within a range of $27 to $29 per share. Dividends of $1.77 per share have also been paid over the last 12 months.
Shares in the bank stock have also underperformed the broader S&P/ASX 200 Banks Index (ASX: XBK) by 14% in the past year. They are now swapping hands at $27.71 apiece in morning trade on Monday.
Despite this underperformance, analysts' opinions are mixed. Is now the time to get tactical on ANZ shares? Let's see.
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ANZ shares a tactical buy?
Macquarie Equities has joined the debate with some interesting comments on where ANZ shares currently sit within the cycle.
Analyst Victor German said Macquarie still sees "all banks as expensive", according to The Australian.
But German says ANZ's underperformance relative to other banking majors – and its recent share price activity – could present an opportunity.
[G]iven ANZ's underperformance, in our view, the likely outcomes of the Markets-related investigation appear to be captured in the share price.
We believe further related underperformance potentially presents a tactical buying opportunity.
It's important to note that Macquarie still has an underperform rating on ANZ stock. So what gives?
To be clear, as per the CFA Institute, in portfolio management there are two types of "allocations". The first is known as strategic asset allocation. It determines what asset classes to own and at what portfolio weights.
For instance, the strategic allocations in your superannuation fund might be 60% to equities and 40% to bonds in a diversified portfolio.
Or it might be 80% and 20% respectively, depending on various factors.
The second is known as tactical asset allocation and is normally reserved for more active investors. It involves buying stocks "tactically" when certain opportunities present in the short term.
You may be willing to deviate from those "strategic allocations" above if such opportunities arise and sell them earlier than usual. This is what Macquarie refers to when it says a 'tactical' buying opportunity.
There might be some weight to Macquarie's comments, based on ANZ's recent business activity. As we reported last week, the bank has grown its share of the mortgage lending market.
Following the completion of its $4.9 billion acquisition of Suncorp Group Ltd (ASX: SUN)'s banking arm, ANZ has overtaken National Australia Bank Ltd (ASX: NAB) to become Australia's third-largest mortgage lender.
This acquisition has increased ANZ's market share to nearly 16% compared to NAB's 14.46%, a pivot shift in the composition of the market.
What do other brokers say?
Goldman Sachs is also bullish on ANZ shares. The broker recently adjusted its earnings estimates to reflect the Suncorp acquisition, forecasting earnings per share (EPS) increases of around 1% and 5.8% for FY24 and FY25, respectively.
Goldman has reiterated its buy rating with a price target of $29.10 per share, highlighting the potential for higher returns from its institutional business.
However, as my colleague Tristan recently reported, Morgan Stanley downgraded its price target on the stock to $26.20 apiece with an an underweight rating.
While ANZ has made strategic gains, it still faces challenges. For instance, NAB, despite losing market share, says it continues to prioritise more profitable areas of its business.
NAB CEO Andrew Irvine has indicated that the bank is focusing on higher-return segments. This does not include mortgage lending, he says.
NAB shares have risen nearly 15% this year, compared to ANZ's circa 7% gain. Could this explain its recent share price performance?
ANZ shares snapshot
ANZ's recent underperformance, coupled with its strategic acquisition of Suncorp Bank, presents a complex picture.
While some analysts see potential for a "tactical buying opportunity", investors should carefully consider the entirety of their personal circumstances.
Always conduct your own due diligence before making any investment decisions.
