The Westpac Banking Corp (ASX: WBC) share price has fallen off a cliff since late October, shedding more than 15%.
The banking giant has faced tough trading conditions, which have led investors to flee after reporting its full-year results.
At yesterday's closing bell, Westpac shares clawed back some gains to end the day 0.6% higher to $21.81.
How is Westpac performing lately?
Investors appear to have mixed feelings about the value of Westpac shares in the current climate. The company failed to hit market expectations in its 2021 scorecard, and its shares plummeted after the release.
Westpac experienced net interest margin (NIM) pressures driven by a raft of unfavourable market environment factors. Key drivers included lower spreads across new mortgages, reduced business lending interest rates, and reductions in personal and business lending average balances.
Analysts at Goldman Sachs believe that NIMs will continue to see headwinds in FY22 from competition and lower rates. This is expected to partially offset tailwinds generated by lower wholesale funding.
On volumes, Goldman Sachs predicts system housing loan growth to continue its positive momentum and for business lending to recover. Post-COVID-19 is expected to bring about a more positive operating environment and confident business sentiment.
Are Westpac shares good value?
Following the FY21 results, a number of brokers weighed in on the company's share price.
Analysts at Morgan Stanley downgraded their outlook to an "equal weight" rating from "overweight" for the Westpac share price. The broker cut its price target by 14% to $24.80.
Goldman Sachs also reassessed their rating, reducing the view on Westpac shares by 11% to $25.60. Based on the current share price, this implies an upside of approximately 15%.
The most recent note came from multinational investment bank Bell Potter. The firm discounted Westpac shares by 4.1% to a 12-month price target of $26.
Westpac share price snapshot
Despite sinking in recent times, the Westpac share price has gained around 10% over the last 12 months. Although, when looking over a 5-year time frame, Westpac shares are down by more than 30%.
Westpac has a price-to-earnings (P/E) ratio of 17.45 and commands a market capitalisation of roughly $80.01 billion.
