Can the Westpac Banking Corp share price keep climbing higher?

Much to the delight of its shareholders, the Westpac Banking Corp (ASX: WBC) share price has risen a massive 16% in the last six months.

But after such a stellar run is now the time to lock in your gains or can its shares still climb further?

Opinion is certainly divided on this. In fact, two leading brokers have recently released research notes with opposing views.

In one corner you have Citi which has a sell rating and $30.50 price target on Australia’s oldest bank. In the other corner there is Deutsche Bank with a buy rating and $35.90 price target.

Analysts at Citi believe that Australian bank shares have run hard in the last few months, but lack any real operational improvements to justify the rally.

Whereas analysts at Deutsche believe that the bank offers investors attractive growth and defensive qualities.

What I would do

Although I have been very bullish on Westpac and Australia and New Zealand Banking Group (ASX: ANZ) in the past, at current prices I would have to side with Citi’s view that the banks are now overvalued.

Whilst I wouldn’t necessarily be in a rush to sell them, I certainly wouldn’t be a buyer at current prices.

At over 15x trailing earnings I feel Westpac’s shares offer limited upside potential, but a significant amount of downside risk.

For this reason I would suggest investors avoid Westpac until its share price drops to a more reasonable level. In the meantime an investment in a dividend share like Retail Food Group Limited (ASX: RFG) could be a far better option in my opinion.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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