National Australia Bank Ltd (ASX: NAB) shares have clawed back from today's early morning losses.
In early afternoon trade on Tuesday, shares in the S&P/ASX 200 Index (ASX: XJO) bank stock are trading for $38.68, up 0.1%.
If the stock can maintain this positive momentum, this will mark the fifth consecutive trading day of gains for the big four bank.
This string of gains also looks to reinforce Shaw and Partners' Jed Richards advice to take some profit from NAB shares (courtesy of The Bull).
Time to sell your NAB shares?
Richards has a sell recommendation on the ASX 200 bank.
He noted that its "shares have risen from $30.86 on January 2 to trade at $37.89 on August 29". And as we looked at above, NAB shares are now trading for an even higher premium of $38.68 apiece.
So, why could it be time to sell those shares today?
According to Richards:
Revenue from ordinary activities was down 3.8% in the first half of fiscal year 2024, when compared to the prior corresponding period. Net profit after tax fell 11.9%.
This may be an opportune time to take some profits by reducing exposure to banks, particularly if investors are over-exposed to the broader sector.
What are other analysts recommending?
Goldman Sachs last updated its views on NAB shares on 16 August. That came on the heels of the bank's third-quarter update.
Highlights from that update included quarterly cash earnings of $1.75 billion. That's an impressive figure, but it was down 0.2% from the first-half quarterly average.
NAB's net interest margin (NIM) was stable. But expenses were up 1% over the quarter, with higher salary-related costs outpacing cost reductions from productivity improvements.
Statutory net profit for the three months came in at $1.9 billion.
With the quarterly update on hand, Goldman Sachs maintained its neutral rating on NAB shares with a $34.24 price target. That's some 11.5% below current levels.
According to the broker:
While we are attracted to NAB's SME exposures (which is driven more by service proposition as opposed pricing which allows for better NIM management than housing lending), the stock's valuation is difficult to justify.
Goldman cited upside risks to its forecast, including "better performance on expense control, sustained extraction of productivity benefits [and] outperformance on NIM management".
According to Goldman Sachs, downside risks for NAB shares include "higher-than-expected costs, softer-than-expected commercial lending growth [and] failure to successfully execute on various strategic initiatives".
How have NAB shares been tracking longer term?
Atop delivering two fully franked dividends in the last year, NAB shares have gained more than 33% over the past 12 months. That's more than three times the gains posted by the ASX 200 in this same time.
