In early trade the Westpac Banking Corp (ASX: WBC) share price is the best performer amongst the big four banks.
At the time of writing the shares of Australia's oldest bank are up 1.5% to $31.13.
Why are its shares higher?
With no news out of the bank this morning, this move higher is likely to be attributable to a positive broker note out of the Macquarie Group Ltd (ASX: MQG) equities desk.
According to the note, its analysts have upgraded Westpac's shares to an outperform rating from neutral.
Furthermore, the broker has increased its price target from $34.50 to $35.00. This price target implies potential upside, excluding dividends, of 13% for its shares over the next 12 months.
Macquarie's analysts have turned bullish on the bank due to their belief that it could return capital to shareholders in the form of special dividends and buybacks in the near future.
This has been enough for the broker to look beyond its concerns that growth will be hard to come by in the banking sector over the medium term due to margin pressures and a cooling housing market.
Should you invest?
While I think Westpac is the best option in the banking sector at the moment ahead of Commonwealth Bank of Australia (ASX: CBA), I believe it is a hold at the current share price and would wait to get in at a cheaper price.
Ideally I would pick up shares close to the $30 mark, allowing for a greater margin of safety.
After all, although Macquarie's price target implies significant upside for its shares, it is amongst the more bullish targets. At present the consensus price target is around $33.70, which is roughly 8% higher than the current share price.
