It has been a tough few weeks for the ANZ Group Holdings Ltd (ASX: ANZ) share price.
Since peaking at $30.23 in the middle of July, the banking giant's shares have lost almost 9% of their value and currently trade at $27.65.
While this is disappointing for shareholders, has it opened up a buying opportunity for the rest of us? Let's see what one leading broker is saying.
Is the ANZ share price good value?
According to a note out of Goldman Sachs this morning, its analysts think investors should be snapping up the bank's shares while they are down.
In response to its capital position update, the broker has retained its buy rating on the banking giant's shares with an improved price target of $29.42.
Based on the current ANZ share price, this implies potential upside of 6.4% for investors over the next 12 months.
And with the broker forecasting partially franked dividends of $1.66 per share in FY 2024, FY 2025, and FY 2026, investors can look forward to receiving 6% dividend yields each year.
This means that the total potential 12-month return is approximately 12.4%. That's comfortably ahead of the historical average market return.
What is the broker saying?
Goldman has made only minor changes to its estimates following ANZ's capital position update. It explains:
ANZ today provided an update on its capital position following a series of adjustments to ANZ's Common Equity Tier 1 (CET1) arising from ANZ's acquisition of Suncorp Bank and other model and prudential changes. The incremental news in the announcement was that revised RWA methodology and model changes will result in a c. 30 bp improvement in ANZ's Level 2 CET1 ratio by 30-Sep-24. We make very minor EPS adjustments but given additional surplus capital, our TP moves to A$29.42 (from A$29.10).
There is no change to our investment thesis or Buy rating.
Speaking of which, its investment thesis is based on potential productivity benefits, the improving profitability of its institutional business, and upside risk to group returns. It summarises:
We are Buy-rated 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 discount to the sector (ex-dividend adjusted).
