National Australia Bank Ltd (ASX: NAB) shares are having a strong day on Thursday.
In afternoon trade, the banking giant's shares are up 2% to $30.70.
As you can see below, this means its share price is now up over 20% from its June low.
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Is it too late to buy NAB shares?
The good news for investors is that Goldman Sachs doesn't believe it is too late to buy NAB shares.
In fact, its analysts are expecting the bank's shares to rise another 15% from current levels. The broker has a buy rating and $35.41 price target on them.
In addition, Goldman is expecting NAB to pay a $1.73 per share dividend in FY 2023. This equates to a 5.6% dividend yield, which increases the total potential return beyond 20%.
Three reasons to invest
Goldman Sachs has outlined three key reasons why it thinks investors should buy NAB shares.
The first two relate to the bank's overweight exposure to commercial banking. It explained:
Our Buy rating on NAB is predicated on: i) NAB providing the best leverage to the thematic that domestic volume momentum will favour commercial over housing volumes over both the short- and medium-term, ii) our expectation that commercial lending will be better insulated from competitive pressures particularly prevalent in mortgage lending.
The third reason is the hard work it has already undertaken on cost management initiatives. Goldman said:
NAB's cost management initiatives, which seem further progressed vs. peers, has allowed it to deliver the highest levels of productivity over the last three years, and we think this leaves it well positioned for an environment of elevated inflationary pressure (c. A$400 mn productivity savings expected in FY23).
All in all, this could make NAB a top option if you're looking for banking sector exposure in 2023.
