What these top brokers are saying about the Westpac (ASX:WBC) share price

These experts have voiced their opinion on what investors should look out for.

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The Westpac Banking Corp (ASX: WBC) share price is edging lower in afternoon trade. Westpac shares are now changing hands at $25.26.

This continues its struggles over the past month. Over that period Westpac shares are 1.46% in the red.

What’s up with the Westpac share price lately?

Westpac shareholders have been sailing choppy seas over the last few weeks. They have been watching their shares trade in a range of $24.91 to $26 since 16 September.

The company took a hit at the time, on the back of a third rates cut it made to its savings account products.

The banking giant trimmed the interest rates on its LifeSavings products by 0.5% for some account holders, and 0.1% for all others.

Investors punished the company on the back of the news, sending its share price 4% lower the following week.

After making a swift recovery to its former highs, the Westpac share price took another hit on 11 October. The company announced a series of items that are set to impact its performance in the second half.

These “notable items” will set the banking giant back $1.3 billion on its net profit and cash earnings guidance for H2 2022, according to the company.

Specifically, the impairments comprise a blend of asset writedowns in its institutional banking unit ($965 million); provisions for liabilities such as refunds and litigation ($172 million); and transaction costs associated with recent divestments ($291 million combined).

Westpac understands this will have a net 15 basis point effect on its CET 1 capital ratio requirements.

Will these headwinds continue to plague the company? These leading brokers have weighed in on the debate to offer their opinion on the Westpac share price.

Can Westpac rebound from these pressures?

Analysts at investment bank Macquarie Group think it might not be such smooth sailing for Westpac to get out of the current situation.

The broker was curious about Westpac’s decision to write down the value of its institutional banking unit’s goodwill as part of its earnings management.

Macquarie does note, however, that Westpac’s earnings have been on the slide over several periods. It reckons “earnings are likely to remain under pressure” for the company.

Morgan Stanley’s investment crew has also weighed in. They say Westpac’s earnings down step was substantially larger than its internal forecasts of $261 million.

The broker looks at Westpac’s FY22 earnings guidance and off-market buyback as key inflection points for Westpac’s share price. Morgan Stanley has wound back its price target by 1% to $28.90.

Despite this, it maintains an overweight rating on the company’s shares.

Finally, leading broker Citi has chimed in and believes Westpac’s announcement could be a roadblock for the company’s management outfit.

This is especially true given Westpac management’s efforts to re-establish credibility and lay out its growth vision for the future, Citi says. Citi downgrades its modelling by $1.3 billion, or 20%, as a result.

Westpac shares are up 31% this year to date, after sliding 2% into the red this past week of trading.

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The author Zach Bristow has no positions 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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