There could be a lot of value to be found in the banking sector right now for investors.
That's the view of a number of analysts, which have been tipping several big four banks as buys recently.
One of those banks is National Australia Bank Ltd (ASX: NAB), which Goldman Sachs is positive on and sees major upside potential for its share price.
Where is the NAB share price heading?
According to a recent note, the broker has a buy rating and a $30.69 price target on the banking giant's shares.
Based on the current NAB share price, this implies a potential upside of approximately 20% for investors over the next 12 months.
In addition, Goldman is forecasting fully franked dividends per share of $1.66 in both FY 2023 and FY 2024.
This will mean dividend yields of 6.5%, which stretches the total potential 12-month return beyond 26%.
Why is the broker bullish?
There are five reasons why Goldman is bullish on the NAB share price. This includes its exposure to commercial lending and the work it has done on productivity in recent years. It explains:
Our Buy rating on NAB is predicated on: i) we see volume momentum over the next 12 months as favouring commercial volumes over housing volumes, and we believe NAB provides the best exposure to this thematic, ii) NAB has delivered the highest levels of productivity over the last three years and its investments continue to yield benefits (A$400 mn expected in FY23E), which we think leaves it well positioned for an environment of elevated inflationary pressure, iii) NAB's strong capital surplus position (A$3.1 bn of surplus capital above the top-end of its target CET1 range of 11.0-11.5%) allows flexibility for further buy-backs, v) NAB returns improvements vs. peers is not reflected in valuations, and vi) our revised TP offers c. 21% [now 27%] TSR.
