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Should you buy Australia and New Zealand Banking Group shares?

I think it is fair to say that the last six months have been reasonably disappointing for the Australia and New Zealand Banking Group (ASX: ANZ) share price.

During this time the banking giant’s shares have lost almost 7% of their value.

Does this put ANZ Bank’s shares in the buy zone?

Whilst I wouldn’t necessarily sell its shares if I owned them, I’m not a buyer at the current share price despite this decline.

In my opinion, ANZ Bank’s shares would have to fall towards the $27.00 level before I backed up the truck. At that price I believe they would provide investors with both value and income and a compelling risk/reward.

I’m not alone in this view. As I mentioned last week, Morgan Stanley recently downgraded the banking giant’s shares to an equal-weight rating, which is essentially the equivalent of a hold or neutral rating.

The broker also reduced its price target on ANZ Bank’s shares to $29.00. Which based on the current share price implies potential downside in the region of 3.2%

Analysts at the investment bank downgraded the bank due to concerns over its ability to recover revenue and its belief that ANZ Bank’s loan loss versus normalised loss rates are far greater than the rest of the big four banks.

Which bank shares should you buy?

Although it isn’t as much of a bargain buy as it was a few months ago, I still see a lot of value in Westpac Banking Corp (ASX: WBC).

Of all the big four, I think it provides investors with the best value for money given its solid business and equally solid outlook.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. 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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