Some Big 4 banks have performed strongly and consistently over the past year, while others have experienced more turbulence.
While some investors may be optimistic about a continued price run, Macquarie Group Ltd (ASX: MQG)'s rating and target price suggest Big 4 bank stocks might be due a price correction.
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Macquarie's view on the Big 4 banks
In a note to investors on 30 May, Macquarie revealed its position, price targets, and potential upside/downside to its target price on the Big 4 banks.
The broker maintains its neutral rating and price target of $35 on National Australia Bank Ltd (ASX: NAB) shares, but has noted a potential 6.7% downside. The target price represents a potential 7.94% drop from Tuesday's trading level.
Macquarie has also kept its underperform rating on Commonwealth Bank of Australia (ASX: CBA) shares and a $105 target price but noted a potential 39.8% downside. This represents a potential 40.92% decline from CBA's current trading price at the time of writing.
For Westpac Banking Corp (ASX: WBC), the broker maintains its underperform rating and $27.50 target price, but has noted a potential 13.3% downside. This suggests a potential 15.79% drop in Westpac's share price from the time of writing.
For ANZ Group Holdings Ltd (ASX: ANZ), Macquarie has maintained a neutral position and $27.50 price target, but has noted a potential 4.9% downside. Macquarie's target price is 6.2% lower than ANZ's price when writing.
The price targets come as part of the broker's update on deposit trends and business credit growth.
What NAB, CBA, Westpac, and ANZ shares are trading at now
The NAB share price closed at $38.19 on Tuesday. The share price is up 10.82% over the year.
CBA shares last closed at $178.64, up 47.28% over the year.
The Westpac share price closed at $32.62 on Tuesday afternoon. The bank's share price rose over the day, recovering some ground from a sharp drop between 2 May and 8 May. Overall, Westpac's share price is up 22.49% over the year.
The ANZ share price closed at $29.36 on Tuesday. It has risen 2.73% over the past year.
Macquarie's outlook on the banking sector
"As discussed in our earnings wrap, we continue to see downside risk to earnings and margins (we are 1-5% below consensus for PPOP in FY26E)," the broker said.
"In our view, consensus is still not fully capturing the effect of lower rates on bank margins, with EPS downgrades likely as we approach FY26."
Macquarie is underweight in the banks sector, with NAB (Neutral) remaining its preferred exposure. The broker cites underlying earnings trends and the weak revenue outlook for its position.
