Here’s what Bell Potter thinks of the Westpac (ASX:WBC) share price

Time to buy Westpac shares or should you wait?

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The Westpac Banking Corp (ASX: WBC) share price has had a difficult two months.

Since the start of November, the banking giant’s shares have fallen 18%.

This compares unfavourably to a small gain by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Why is the Westpac share price underperforming?

Investors have been selling down the Westpac share price over the last couple of months due to its full year results.

Although Australia’s oldest bank delivered strong profit growth, its margin outlook spooked the market. This is being caused by aggressive competition in the home loans market, which is weighing on margins.

In addition to this, doubts over the company’s ability to reduce its cost base to $8 billion in FY 2024 have been weighing on the Westpac share price.

Is this a buying opportunity?

While there are a number of brokers out there that are positive, such as Morgans (as discussed here), not everyone sees the weakness in the Westpac share price as a buying opportunity.

The team at Bell Potter, for example, appear to believe investors should sit tight for the time being.

Following its annual general meeting last week, its analysts reiterated their hold rating and $22.00 price target on the bank’s shares.

Bell Potter commented: “It seems it was another year of transformation prior to getting back to sustainable profit growth. While profit increased mainly due to an easing off in COVID-19 issues, there is still a lot of work to be done in driving change – specifically in terms of Fix, Simplify and Perform.”

“We note much of the year has already been spent on Fix (risk management, customer remediation and putting to bed regulatory investigations) and Simplify programs (business exits, closed products and streamlined fees), while Perform is now the main attraction (strengthen franchise, improve returns and lower costs). However, these changes still soak up time and money,” it added.

All in all, the broker appears to believe investors should wait to see how these initiatives go before considering an investment.

Should you invest $1,000 in Westpac right now?

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Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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