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%.
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.