Why has the Westpac share price just hit a 52-week high?

This banking giant's shareholders will be smiling on Thursday.

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Young investor sits at desk looking happy after discovering Westpac's dividend reinvestment plan

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The Westpac Banking Corp (ASX: WBC) share price has continued its positive run on Thursday.

So much so, the banking giant's shares have just hit a 52-week high of $24.40.

This means that its shares are up an impressive 18% since the start of November.

Why is the Westpac share price at a 52-week high?

Investors have been piling into the banking sector over the last couple of months on the belief that tough trading conditions and competition pressures are now easing.

In addition, the recent re-rating of bank shares to higher multiples has been triggered by the prospect of multiple rate cuts and optimism over the economy and banks' earnings over the next two years according to analysts at Morgan Stanley.

It recently noted that ASX bank shares are now trading on earnings multiples greater than 15 times. This is higher than the pre-COVID 10-year average of approximately 12.2 times earnings.

Clearly optimism is high. But is it too late to invest? Let's find out.

Where next for Westpac's shares?

Most brokers believes that the Westpac share price is either overvalued or fully valued.

For example, Morgan Stanley has an underweight rating and $21.70 price target, and Macquarie has an outperform rating but a price target ($24.00) which is lower than where its shares currently trade.

But there is one broker that is more bullish than the rest – Ord Minnett.

A recent note out of the broker reveals that its analysts have an accumulate rating and $28.00 price target on the bank's shares. This implies potential upside of almost 15% for investors over the next 12 months.

And with the broker forecasting a $1.44 per share fully franked dividend in FY 2024 (and FY 2025), the total 12-month potential return stretches to 5.9%.

Time will tell which broker makes the right call.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. 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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