The Westpac Banking Corp (ASX: WBC) share price has been a very strong performer this year.
Since the start of 2021, Australia's oldest bank has seen its shares rise 31%.
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Is the Westpac share price still in the buy zone?
According to a note out of Bell Potter, its analysts aren't in a rush to invest after this strong gain.
This morning, the broker reiterated its hold rating and $27.50 price target on the bank's shares.
Based on the latest Westpac share price of $26.03, this implies potential upside of 5.5% over the next 12 months before dividends. This increases to approximately 10% if you include the $1.24 per share fully franked dividend the broker is forecasting in FY 2022.
What did the broker say?
Bell Potter notes that the sale of the bank's 89.9% stake in Westpac Bank PNG Limited has been blocked by the Papua New Guinea Independent Consumer and Competition Commission (ICCC).
The sale of its Pacific businesses is part of its plan to simplify operations and focus on consumer, business, and institutional banking only in the Australasian area.
Bell Potter commented: "This [denial of authorisation] is based on the ICCC not currently being satisfied that the acquisition "will not, or will not likely, have the effect of substantially lessening competition in the relevant markets identified". While disappointing, this is only a minor dent in the whole strategy in any case – being not more than 6bp expected CET1 benefit. WBC will continue to run these businesses but review its sale process in the meantime."
The main issue that Bell Potter has with the Westpac share price is its valuation. The broker feels that its shares are fully valued at the current level and sees better value elsewhere.
Though, it is worth noting that not everyone agrees with this view. For example, the team at Citi currently have a buy rating and $30.00 price target on its shares.
Time will tell which broker makes the right call.
