The Westpac Banking Corp (ASX: WBC) share price was on the move in September.
The banking giant's shares were on course to record another impressive gain before a poor finish to the month wiped out most of its gains.
For example, on 23 September the Westpac share price peaked at a 52-week high of $33.78. If it had stayed there, it would have meant a monthly gain of 8% for the shares of Australia's oldest bank.
Unfortunately, things didn't stay that way. Late in the month, the bank's shares faded as investors exited the sector.
This led to Westpac's shares ending the period at $31.72, locking in a modest monthly gain of 1.5%.
As a comparison, the S&P/ASX 200 Index (ASX: XJO) rose 2.2% during the month.
Image source: Getty Images
Why did the Westpac share price underperform the market?
Westpac and the rest of the big four banks appeared to get caught up in a great rotation late in the month.
It seems that many large investors decided that the banks had reached a peak following strong gains over the past 12 months. For example, the Westpac share price remains up 50% since this time last year.
And with many of the big mining stocks down heavily and trading at or around 52-week lows, they appear to have rotated into them following news of major stimulus in China.
In fact, 23 September is the day that the Westpac share price peaked at its 52-week high. A week later it was down 6.1% to $31.72.
Over that same seven-day period, the BHP Group Ltd (ASX: BHP) share price climbed 15.5%, the Rio Tinto Ltd (ASX: RIO) share price rose 15%, and the Fortescue Ltd (ASX: FMG) share price jumped 17%.
Is now a good time to invest?
Despite Westpac's shares pulling back late in the month, almost all the major brokers have valuations lower than where they trade today.
One of those is Goldman Sachs, which has a sell rating and $25.84 price target on its shares. This implies potential downside of almost 19% for investors. It commented:
We remain Sell-rated on WBC given: i) WBC's technology simplification plan (details here) comes with a significant degree of execution risk, given historically banks' large-scale transformation programs have struggled to stay on budget, and we note management today has flagged ongoing inflationary pressures, and ii) of the major banks, WBC's balance sheet is the most overweight domestic housing, which we expect will be more growth constrained than commercial lending over the medium term. Therefore, trading on a 12-mo forward PER of 15.3x, nearly two standard deviations above its 15-yr average, we stay Sell.
