This leading broker believes NAB (ASX:NAB) shares can run a lot higher

This banking giant's shares could be great value…

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National Australia Bank Ltd (ASX: NAB) shares have been very strong performers over the last 12 months.

During this time, the banking giant's shares have risen a sizeable 57%.

This is more than double the 26% gain by the the S&P/ASX 200 Index (ASX: XJO) over the same period.

Is it too late to buy NAB shares?

The good news is that it may not be too late to buy NAB shares according to one leading broker.

A note out of Goldman Sachs reveals that its analysts have retained their conviction buy rating and lifted their price target to $30.34.

With the current NAB share price trading at $26.55, this implies potential upside of 14% over the next 12 months before dividends. This stretches to approximately 19% if you include dividends.

What did Goldman say?

According to the note, Goldman was pleased with the bank's announcement of a $2.5 billion share buy-back. It notes that the timing was earlier than it anticipated, which it believes demonstrates the strength of the sector.

The good news is that Goldman believes the buybacks may not stop there, which will boost NAB's earnings per share in the coming years.

It explained: "We amend our forecasts for today's announced A$2.5 bn buyback, and also assume a further A$1.0 bn buyback that we expect to take place in 2H22E given the surplus capital that still remains. As a result, our FY21/22/23E EPS move by 0.3%/2.9%/4.7%, and our TP increases to A$30.34."

Furthermore, the broker acknowledges that even after a combined $3.5 billion buyback, there's still scope for further capital management given how its CET1 ratio will be above APRA's unquestionably strong benchmark of 10.5%.

It said: "We highlight that even with our assumption of A$3.5 bn of total buybacks, our 2H22E CET1 ratio still remains at c. 12%, well above its target range."

All in all, Goldman sees plenty of reasons to be positive on NAB shares right now. As a result, it remains its top pick among the big four.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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