National Australia Bank Ltd. (ASX: NAB) shares are worth $30, according to one analyst.
NAB share price
According to Dow Jones Newswires, analysts at investment bank UBS recently slapped NAB shares with a $30 price target, up 9% from their prior target.
The average price target of all analysts surveyed by The Wall Street Journal is $30.42. At today's market price of $30.04, that does not leave a lot of room for new investors to buy.
Should you buy today?
At today's prices, it doesn't appear investors are getting a bargain in NAB. However, if interest rates stay low in 2017 it is likely that investors will continue to eye off NAB shares for its big dividend yield.
Indeed, despite forecasts for a reduction in its dividend payments, the consensus among analysts is that NAB will pay a dividend equivalent to a yield of 6.4% fully franked. That's 9.1% grossed up for those tax effective franking credits. Try getting that at the…err…bank!
Foolish Takeaway
In my opinion, a $30 price target would seem appropriate for NAB shares given its opportunity set. Indeed, it does not appear to be a bargain nor a clear sell at today's levels. The best time to buy bank shares is when property prices are faltering and provisions for bad debts soar higher — we are not there yet.
If you want to unearth bargain investments — that also pay big dividends — you need to look further down the market to the blue chips of tomorrow. Down there you will find companies that fewer analysts follow, that also have a longer runway for growth.
