The Westpac Banking Corp (ASX: WBC) share price has been a poor performer in recent weeks.
For example, since the start of November, the banking giant's shares have lost approximately 19% of their value.
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Is the weakness in the Westpac share price a buying opportunity?
One leading broker that is sitting on the fence with the Westpac share price is Goldman Sachs. Last week the broker retained its neutral rating on Australia's oldest bank's shares.
Though, it is worth noting that with a price target of $25.60, Goldman still sees 23% upside for the Westpac share price over the next 12 months.
Furthermore, its analysts are forecasting a fully franked 5.8% dividend yield in FY 2022. If you add this into the equation, this brings the total return on offer to almost 29%. Not bad for a neutral rating!
What did the broker say?
The main reasons Goldman Sachs isn't overly positive about the Westpac share price are the bank's margin outlook and doubts over management's bold cost reduction plans.
Goldman explained: "We remain Neutral rated on WBC, reflecting: i) the significant reset in the margin at the FY21 result provides a weak platform for revenue growth in FY22E; ii) with expenses disappointing in 2H21, we believe the potential for WBC to reach its FY24 cost target of A$8.0 bn should be more heavily discounted than previously was the case, and we note that our like-for-like FY24E cost forecast is c. A$8.6 bn; and iii) the benefits to non-interest income from increased economic activity are set to be offset by a loss of income from divestments."
Though, the broker does acknowledge there is potential upside risk from "higher interest rates, outperformance on NIM management, better than expected performance on cost management."
