Westpac share price inches ahead despite broker cutting its price target by 16%

Westpac shares are edging higher despite a bearish broker note…

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The Westpac Banking Corp (ASX: WBC) share price is edging ever so slightly higher to $19.77 on Wednesday morning.

That’s despite the market sinking and the banking giant being the subject of a less than positive broker note.

What is the broker saying?

According to a note out of Jefferies, its analysts have retained their hold rating but cut their price target on the Westpac share price by 16% to $18.15.

This implies potential downside of 8% for investors over the next 12 months from current levels.

Jefferies made the move on the belief that consensus estimates could be wide of the mark.

This is due to a combination of the treatment of $1 billion notable item loss on the bank’s Life Insurance divestment and growing risks from competition for deposits and inflation.

The broker fears that the latter could have a big impact on Australia’s oldest bank’s $8 billion FY 2024 cost base target. In addition, its analysts have suggested that Westpac needs a large cultural reset instead of a short-term cost reset strategy.

Is anyone positive on the Westpac share price?

The good news is that there are a couple of brokers that are positive on the Westpac share price.

One of those is Citi, which late last month retained its buy rating and $29.00 price target on the bank’s shares. This implies potential upside of almost 47% for investors over the next 12 months.

But it gets better. With Citi forecasting a fully franked dividend of $1.55 per share in FY 2023, a very generous yield of 7.8% could be awaiting investors if the broker is on the money with its recommendation.

Elsewhere, last week, Morgan Stanley put an overweight rating and more modest price target of $22.30 on Westpac’s shares. This implies 13% upside from current levels.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in 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 Scott Phillips.

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