The National Australia Bank Ltd (ASX: NAB) share price has pushed higher on Friday and is up 0.5% to $24.70 in early afternoon trade.
This latest gain means the banking giant's shares have now rallied 4.5% higher since the start of the year.
While this is undoubtedly a solid gain, one leading broker believes there are plenty more gains ahead this year.
According to a note out of Citi, its analysts have retained their buy rating and $31.00 price target on its shares after the bank announced plans to follow the lead of its peers and raise its variable interest rates at the end of the month.
This price target implies potential upside of over 25% over the next 12 months based on the current share price and excluding dividends.
If you include the $1.98 per share dividend that Citi expects NAB to pay this year, this potential return stretches to an incredible 33.5%.
Why does Citi like NAB?
The broker believes that at the current level, NAB's shares offer a compelling risk/reward for investors due to its belief that the bank will benefit greatly from its major restructure.
In addition to this, positive conditions in business lending and the bank's overweight exposure to it means it is well-positioned in comparison to many of its rivals.
This is a view echoed by analysts at Goldman Sachs. Although Australia and New Zealand Banking Group (ASX: ANZ) remains its preferred pick in the space, it recently upgraded NAB's shares to a buy rating with a $30.76 price target.
This was due to its belief that its optimised portfolio would drive superior earnings per share growth.
Should you invest?
While I think the shares of NAB, ANZ, and Westpac Banking Corp (ASX: WBC) are all in the buy zone, next Friday the Royal Commission final report is due to be handed down.
Investors might want to keep their powder dry until then just in case some nasty surprises are included in it.
