The Westpac Banking Corp (ASX: WBC) share price is pushing higher on Friday.
In morning trade, the banking giant's shares are up almost 1% to $24.10.
Where next for the Westpac share price?
According to a note out of Goldman Sachs, while its analysts aren't recommending the bank's shares as a buy, they do see significant upside potential for them.
The note reveals that this morning the broker has retained its neutral rating and $27.29 price target.
Based on the current Westpac share price, this implies potential upside of 13% for investors. And if you include dividends, the return stretches to approximately 18%.
What did the broker say?
Goldman highlights that Westpac has agreed to merge its BT Fund Management's personal and corporate superannuation funds with Mercer Super Trust and sell its Advance Asset Management business.
The broker notes that these transactions are consistent with its simplification strategy and expect them to boost its CET1 ratio. It said:
We view these transactions as entirely consistent with WBC's strategy of simplifying the overall group, and we note that at the time of its 1H22 result, WBC noted other assets sales that have been announced but not yet finalized would add a further 16 bp to WBC's CET1 ratio.
Post this transaction, operations that remain within the Specialist business and are under review to potentially being sold include the platforms business (i.e. Panorama) and Westpac Pacific, the latter which WBC had previously attempted to sell (proposed sale on 7-Dec-20) but had been blocked by regulators.
The broker concluded:
We are Neutral-rated on WBC. Our 12-month TP of A$27.29 is based on a 50%/50% blend of our DCF / ROTE vs. P/NTA valuations. Upside risks: higher interest rates, outperformance on NIM management, better than expected performance on cost management. Downside risks: Slower-than-expected housing growth, risk of higher investment spend, higher exposure to NSW property market.
