Despite a recent blip, National Australia Bank Ltd (ASX: NAB) shares have still smashed the market in 2021.
Since the start of the year, the banking giant's shares have risen by 18%.
This is double the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.
Could now be the time to buy NAB shares?
Although NAB shares are outperforming in 2021, one leading broker believes this trend can continue.
According to a recent note out of Goldman Sachs, its analysts have a conviction buy rating and $30.62 price target on the bank's shares.
So, with NAB shares currently changing hands for $27.10, this implies potential upside of 13% over the next 12 months before dividends.
In addition, Goldman is forecasting a fully franked $1.40 per share dividend in FY 2022. If you include this, the potential total return stretches to 18.1%.
What did Goldman say?
Goldman notes that NAB is its top pick among the major banks. This is due partly to its cost management and strong position in business banking. It also sees significant value in NAB shares at the current level.
The broker explained: "We reiterate our Buy (on CL) on NAB and it remains our preferred sector exposure given: i) NAB's cost management initiatives, which seem further progressed relative to most of its peers, should drive productivity benefits sooner and free up investment spend to be directed more towards customer experience, as opposed to infrastructure (3Q21 update shows NAB is tracking well against this); ii) given NAB's position as the largest business bank and investment in its mortgage capability, we believe it is strongly positioned to benefit from the current recovery in both housing and commercial volumes (3Q21 update showed continued volume momentum); iii) NAB continues to effectively manage the balance between volumes and margins as well as any peer; and iv) our TP offers c. 18% TSR potential."
