Broker tips Westpac (ASX:WBC) share price to keep on rising

Westpac shares are outperforming Afterpay in 2021 and could continue doing so…

| More on:
Three different hands against a blue backdrop signal thumbs up, indicating share price rise on the ASX market

Image source: Getty Images

The big four banks have been out of favour with investors over the last few years due to the Royal Commission and then the COVID-19 pandemic.

Well, it appears fair to say that the banks are well and truly back in favour with investors now. For example, the Westpac Banking Corp (ASX: WBC) share price is up a stunning 36% since the start of the year.

That’s a return that a rapidly growing tech share like Afterpay Ltd (ASX: APT) would be proud of, let alone Australia’s oldest bank.

Can the Westpac share price still go higher?

The good news is that it may not be too late to invest, with one leading broker tipping the Westpac share price to continue its ascent.

According to a note out of Citi from last month, Westpac remains its sole buy in the sector. The broker currently has a buy rating and $29.50 price target on its shares.

Based on the latest Westpac share price, this implies potential upside of 11% over the next 12 months excluding dividends.

And with Citi forecasting dividend yields of approximately 4.4% in FY 2021 and 4.5% in FY 2022, this potential return stretches beyond 15%.

What did Citi say?

Commenting on Westpac’s half year results, the broker said: “The market received WBC’s 1H21 result positively, with core earnings upgrades near-term from a better than expected NIM; and over the medium term, from lower costs. WBC’s target for FY24 costs of $8bn was lower than we anticipated, and management are confident and ambitious.”

“We see many of the building blocks in place for the strategy, even if obvious sensitivities prevent their more fulsome disclosure. The premise of multi-year core earnings upgrades, layered on sector-wide asset quality improvements, leave WBC with a differentiated investment thesis. It remains our sole Buy in a sector that has rallied strongly in the COVID recovery,” it concluded.

Food for thought for investors looking for banking sector options.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

James Mickleboro owns Westpac shares. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares