Westpac (ASX:WBC)’s had a shocker: This is when to buy

Stocks for the big bank have been slaughtered the past couple of days. So is it ripe for bargain hunting now?

| More on:
a woman leans towards the camera holding her ear as if to listen more closely to someone's advice or counsel.

Image source: Getty Images

Westpac Banking Corp (ASX: WBC) shares this week have suffered one of the most spectacular falls seen for an ASX large cap in “peacetime”.

On Tuesday afternoon, the bank stock had plunged 3%, bringing the total loss in just one-and-a-half days to 10.4%.

Ouch.

Investors were trampling over each other to flee the building after Westpac’s results on Monday disappointed the market.

Macquarie, Goldman Sachs, Bell Potter and Morgan Stanley analysts all cut their target stock prices after the announcement.

But the company remains one of Australia’s big four banks, with a market capitalisation of $84.7 billion.

At current share prices, it’s giving out a dividend yield of 3.86% which will head up even more after this month’s 60 cent payout.

So, is it now getting to a point where the share price might offer a bargain pickup?

Be patient if you want to pick up Westpac shares

Market Matters portfolio manager James Gerrish reckons it’s not quite time to pounce on Westpac shares yet.

“The positives of a $3.5 billion buyback and 60c fully franked dividend couldn’t mask the issues under the hood,” he said in a subscriber newsletter.

“Higher costs and weaker margins are an unhealthy combination but there is a turnaround underway, it simply comes down to whether or not we believe it’s making sufficient progress.”

Gerrish’s team is keeping a close eye to see if Westpac shares can sink to $23.

“We have been targeting the $23 as an optimum area to buy WBC and that still looks reasonable,” said Gerrish.

“Another 3% to 3.5% lower and we see value plus an enticing dividend of around 5%.”

If you’re interested, you may not have to wait long. 

The share price has continued to fall even after Gerrish made those comments on Tuesday morning. Westpac shares started the day at $23.78 but already sat at $23.06 in the afternoon.

The bank will begin its share buyback on 17 November, while it will go ex-dividend on Monday for payment on 21 December.

This week’s bloodbath was as much a case of unfulfilled lofty expectations as it was poor performance.

Multiple analysts had rated Westpac as a “buy” last month, expecting attractive numbers, dividend and buyback.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More on Broker Notes

a group of people gathered around a laptop computer with various expressions of interest, concern and surpise on their faces. All are wearing spectacles.
Broker Notes

Broker says Life360 (ASX:360) share price has ~80% upside

The Life360 Inc (ASX: 360) share price was one of the best performers on the Australian share market in 2021. …

Read more »

best asx shares represented by best in show ribbon
Broker Notes

3 ‘champion stocks’ for ASX investors in 2022

If you’re a fan of buy and hold investing, then you may want to look at the “champion stocks” listed …

Read more »

a group of stockbrokers sit in a room with a computer and writing on a wall in chalk indicating calculations and graphs while discussing something on the computer screen.
Broker Notes

Here’s what 67% of brokers think of the current IAG (ASX:IAG) share price

Key points The IAG share price traded up today IAG has made a solid start to the year having rallied …

Read more »

A female financial services professional with a manicured black afro hairstyle turns an ipad screen to show a client across the table a set of ASX shares figures in graph format
Bank Shares

Goldman tips Bank of Queensland (ASX:BOQ) share price to rise 25%

If you’re interested in gaining exposure to the banking sector, then it could be worth considering Bank of Queensland Limited …

Read more »

surprised asx investor appearing incredulous at hearing asx share price
Broker Notes

Top broker sees 43% upside for the Westpac (ASX:WBC) share price

Key points The Westpac share price is down 24% from its highs Morgans believes this has created a buying opportunity …

Read more »

an arrow with sparks shoots up
Consumer Staples & Discretionary Shares

Why is the Dusk (ASX:DSK) share price firing 15% higher today?

Key points Dusk shares are bouncing off a 3-month low today. Shares are soaring 15% into the green at the …

Read more »

Green keyboard button saying buy stock
Broker Notes

Brokers name 3 ASX shares to buy today

It has been another busy week for Australia’s top brokers. This has led to the release of a large number …

Read more »

ASX miners crash opportunity broker buy asx shares represented by investor throwing hands up towards icons of buy and sell broker upgrade buy
Broker Notes

Time to sell? Macquarie just downgraded these 3 ASX shares from buys

Key points Macquarie comes out with a list of downgrades today The 3 ASX shares are all concentrated in resources …

Read more »