Shares in Australia and New Zealand Banking Group Ltd (ASX: ANZ) are in the green on Friday morning, up 0.40% and trading at $27.59.
The bank's share price has shaved off 7% in value since reverting from its previous high of $29.53 back in August and is down almost 3% for the last month.
With that being said, ANZ is again under the microscope with several leading brokers chiming in with their opinions on the direction of its share price.
Let's have a look at what analysts are saying on the outlook for ANZ investors.
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Are ANZ shares a buy?
Broker's at Macquarie were satisfied with the bank's 2H results, and noted improvements to ANZ's margins and release from several provisions.
It also likes how ANZ performed in its markets business and is confident ANZ can continue addressing headwinds faced last year.
Macquarie noted that ANZ's home lending growth still has room for improvement, but that the market likely has this priced in.
One concern Macquarie voiced in a recent note was that of ANZ's raised investment spending guidance, which put a dent in the broker's investment thesis, it said.
As such, the bank's expense target of $8 billion could be in jeopardy says Macquarie. However, it also said that "whilst this removes a potential positive catalyst, if the rate cycle continues to improve, bank earnings may be more resilient, and pressure on management to reduce expenses may subside".
It has an outperform rating on the share with a raised valuation of $30 and had previously stated "the balance of risks is skewed to the upside for ANZ" given its weak price performance lately.
The team at Morgans also have an add rating on ANZ shares, however recently trimmed its price target to $31 after the bank's full year result.
Morgans was anticipating operating expenses to be high for ANZ, and also believes its home-loan turnaround times are lagging behind its peers. This, it believes could be a challenge to its investment thesis, but is confident the bank is taking steps to address the headwinds.
Alas, the broker reckons ANZ can sustainably meet its $8 billion cost target, and continue hitting its cost reduction plans.
ANZ recently had its price target and/or rating upgraded by a number of additional firms as well. For instance, Goldman Sachs upped its target by 3.6% to $31.82 with a buy, whereas Jarden Securities also raised its target to $29.40.
Jefferies upgraded its rating to buy from a sell earlier this month and has a $34.15 price target on the share, implying an upside potential of 24% at the time of writing.
Some are still on the sidelines
The team at investment bank Credit Suisse reckon the path forward is clearer following recent trading updates from ANZ.
The broker reckons ANZ's mortgage lending growth is likely to improve in 2H FY22, especially given management's newfound focus on the division.
Credit Suisse also believes that ANZ will benefit from a steepening yield curve on government bonds and is likely to also benefit from interest rates increasing because of its institutional segment.
Even still, the firm reluctantly maintained its neutral rating on the share with a $28.50 price target. But it does reckon value is starting to present itself in the name.
Fellow broker Citi also reckons ANZ's outlook is far rosier coming into FY22 and thinks the bank's revenue will reach $18.6 billion by FY24 from $18.1 billion last year.
Analysts at Citi see "strong leverage in ANZ's business to a steepening yield curve, and note that institutional volume growth has resumed".
Nonetheless, it also reckons the market is searching for more details on ANZ's growth story, and that some of the catalysts might already be priced in by investors.
In light of this, the broker upgraded its rating to neutral from sell and raised its price target by almost 5% to $29.25.
What's the consensus?
Of the 16 brokers covering ANZ, exactly half of this group have a buy rating or a bullish on the direction of the ANZ share price. There is only 1 sell recommendation, whereas the rest give a neutral/hold rating.
From this list, the average price target is $30.17, implying an upside potential of almost 10% when taking this 'wisdom of the crowd' figure. The spread between the lowest and highest valuations is 25% or $8 per share.
Hence the sentiment appears evenly split on analyst opinion, however at least half of the coverage reckons that ANZ is a buy right now.
In the past 12 months, the ANZ share price has climbed 22% after rallying another 21% this year to date.
