The Westpac Banking Corp (ASX: WBC) share price will be carefully watched in the coming weeks, as analysts speculate on its immediate fortunes.
The bank's stock price has plunged 1.9% in the past month, although there were no direct announcements from it that would have had a material impact.
There was news that the competition watchdog in Papua New Guinea blocked Westpac's $420 million sale of its Fijian and PNG business to Kina Securities Ltd (ASX: KSL).
But that shouldn't have a massive impact on a business with a total market capitalisation of $93 billion.
Buyback or dividend boost both on the cards
So is this a buying opportunity for the stock?
Redpoint Investment Management senior portfolio manager Max Cappetta told The Motley Fool that Westpac is one of his top picks among the big banks.
"Coming up in the dividend calendar is now the full-year results to 30 September for 3 out of Australia's 4 major banks."
While Cappetta forecast both Westpac and National Australia Bank Ltd. (ASX: NAB) to have a superior rebound in profitability, the former could have some cherry on top.
"We also see the potential for capital management by either a buyback or even an increased dividend from Westpac," he said in Ask A Fund Manager.
Citibank analysts agree, this week slapping on a buy rating for Westpac shares with a price target of $30.
That's a handy 18.5% premium on Tuesday's closing price of $25.31.
"Citi is forecasting fully franked dividends of $1.16 per share in FY2021 and then $1.30 per share in FY2022," reported The Motley Fool's James Mickleboro.
"This represents yields of 4.6% and 5.1%, respectively, over the next couple of years."
The downside for Westpac
The risk for Westpac, and indeed any ASX bank share at the moment, is the prospect of a slowing housing market.
This could happen naturally because Australians have taken on so much debt that they can't absorb anymore, which was a concern raised by Morgan Stanley last week.
The alternative is that the property market could deflate artificially from tighter lending regulations, as flagged by Treasurer Josh Frydenberg on Tuesday.
But the good news is that while Morgan Stanley is rating the other 3 majors sell or neutral, it still labels Westpac shares as "overweight" with a $29.20 price target.
