Analysts give their verdict on ANZ shares: Should you buy?

Is it too late to invest in the big four bank?

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ANZ Group Holdings Ltd (ASX: ANZ) shares have been on a good run.

Since this time last week, the banking giant's shares have risen 3.15%.

But can they keep rising from here? Let's see what one leading broker is saying about the big four bank following the release of its half-year results.

Half-year results review

As a reminder, ANZ released its results on Tuesday and reported a cash profit of $3,552 million for the six months ended 31 March. This represents a 1% decline compared to the second half of FY 2023.

Despite this decline, the bank increased its partially franked interim dividend to 85 cents per share and announced a $2 billion on-market share buyback.

Are ANZ shares a buy?

This is harder to answer than normal.

That's because Goldman Sachs has responded to the result by retaining its buy rating on the bank's shares.

However, the broker's improved price target of $28.15 (from $27.69) is a touch below the current ANZ share price of $28.79.

So, if you were looking for share price returns, you may not be seeing any over the next 12 months.

However, if you are looking for a source of income, then ANZ's shares could be worthy of a closer look.

Goldman Sachs is forecasting dividends per share of $1.66 in both FY 2024 and FY 2025. This equates to partially franked dividend yields of 5.75% for investors.

What did the broker say?

Goldman remains positive on ANZ and its shares due to potential productivity benefits, institutional business, and discount to the rest of the sector. It explains:

We reiterate our Buy on ANZ, given i) we are seeing evidence of ANZ's ability to derive productivity benefits (A$201 mn in 1H24) and management noted there remains a large pipeline available which can be used to offset cost inflation. Furthermore, ii) the improving profitability of ANZ's Institutional business remains a key driver of our positive investment thesis. We continue to see upside for Group returns due to accretive mix shifts in the Institutional business towards higher ROE Payments and Cash Management business. Finally, the stock still trades at a 30% discount to the sector (ex-dividend adjusted) versus a 15-yr average discount 13%.

Is anyone else bullish?

One leading broker that sees scope for ANZ shares to rise further is Jefferies.

This morning, the broker has responded to the bank's results by retaining its overweight rating with an improved price target of $31.00 (from $29.00).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. 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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