What predictions are being made for the ANZ share price in April?

Two brokers weigh in on the outlook for the ANZ share price.

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Key points

  • On a price-to-earnings basis, ANZ is the cheapest of the big four banks 
  • The ANZ share price closed down slightly on Friday at $27.78 
  • Both Citi and Morgan Stanley have updated their price targets to levels above its current share price 

There’s a mixed bag of broker opinions on the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price. A few of them have published notes this month summarising their perceptions of the big four bank and whether they recommend a buy, hold, or sell.

First, let’s take a look at the ANZ share price compared to the other big four banks. ANZ closed on Friday at $27.78, down 0.79% in the session and down 0.7% year to date.

By comparison:

  • Westpac Banking Corp (ASX: WBC) $24.21, down 1.22% on Friday and up 11.8% year to date
  • National Australia Bank Ltd (ASX: NAB) $33.14, down 1.37% on Friday and up 12.6% year to date
  • Commonwealth Bank of Australia (ASX: CBA) $105.37, down 2.75% on Friday and up 3% year to date

The price-to-earnings (P/E) ratios lay out like this: ANZ 13.52 times, Westpac 17.56 times, NAB 17.6 times, and CBA 19.8 times.

So, with the figures out of the way, let’s see what a couple of experts think.

Citi backs ANZ and lifts 12-month target

Citi analysts have upgraded ANZ to a buy with a higher share price target of $30.75. They think ANZ shares are cheap compared to CBA shares and NAB shares.

As my Fool colleague James wrote last week: “Citi believes the Reserve Bank’s rate hikes will reshape the banking sector’s earnings profile over the next few years and take net interest margins to levels that are materially higher than consensus estimates. Particularly given its belief that the impact on asset quality won’t be as great as some fear.”

Morgan Stanley downgrades ANZ share price target

Morgan Stanley has downgraded ANZ to equal-weight from overweight. The broker reckons revenue will keep falling. It cut its 12-month price target for ANZ from $30.30 per share to $28.60 per share.

The broker thinks costs are likely to exceed ANZ’s expectations over the near and medium-term due to inflation and the bank’s ongoing need for investment. It’s also worried that ANZ might be losing market share in both the mortgage and business banking categories.

Morgan Stanley said:

We expect ANZ’s revenue to decline again this year due to market share loss, falling margins and lower non-interest income. “Its 3-yr revenue CAGR is also likely to be below the major bank average, given weaker volume growth and more headwinds from increasing competition for deposits in Australia and New Zealand.

ANZ share price summary

ANZ is down 3% over the past 12 months and 15% over the past five years.

The bank has a market capitalisation of $78.23 billion with 2.79 billion shares outstanding.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen owns Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, and 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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