Up 30% this year: Is there more upside ahead for ANZ shares?

Here's one broker's view.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points
  • ANZ shares rose 0.16% to $36.89, up 30% this year, despite a $1.1 billion H2 FY25 charge.
  • Macquarie maintains a neutral rating with a $34.00 target, suggesting a 7.8% downside but sees value compared to peers.
  • Additional charges may muddle investor consensus per Macquarie's note.

ANZ Group Holding Ltd (ASX: ANZ) shares are trading in the green on Wednesday morning. At the time of writing the shares are 0.16% higher and changing hands at $36.89 a piece.

Over the past month the shares have climbed 8.41%, and for the year-to-date they're an impressive 30% higher.

Late last week the banking giant announced an update on significant items. These are expected to impact the bank's second half profits.

ANZ said its H2 FY25 statutory and cash profit will be impacted by several significant items with a net after tax charge of $1.1 billion.

The charges comprise a $285 million charge for an impairment loss for its equity-accounted investment in PT Bank Pan Indonesia, a $585 million pre-tax charge for staff redundancies, and a $271 million pre-tax charge for Australian Securities and Investments Commission (ASIC) settlement.

The bank also said it has finalised the acquisition accounting related to adjustments for its acquisition of Suncorp Bank. This will see an increase to the goodwill of $141 million that was disclosed on 31 March.

Following last week's update, analysts at Macquarie Group Ltd (ASX: MQG) have written to investors with their latest expectations for ANZ shares.

A man in a suit looks surprised as he looks through binoculars.

Image source: Getty Images

Macquarie confirms its stance on ANZ shares

The broker has maintained its neutral rating and $34.00 target price on ANZ shares. This means the major bank is still Macquarie's preferred big four Aussie bank pick. 

At the time of writing, however, the target price represents a potential 7.8% downside for investors over the next 12 months.

"We reduce ANZ's FY25 EPS by 7% reflecting significant items. No changes to future earnings….We leave ANZ price target unchanged given the short term nature of the earnings impacts," the broker said in its investor note.

We believe it is unlikely that ANZ will achieve its stated medium-term targets. However, short-term targets appear achievable and provide upside potential. We see relative value in ANZ, underpinned by its valuation discount to peers (~14–43% discount to peers). Neutral.

ANZ is due to release its H2 FY25 result next week on 10 November.

What else did the broker have to say about ANZ's latest update?

Macquarie noted that ANZ increased its previously guided large notable items and included additional items. This is expected to impact its H2 FY25 earnings by -17%.

Combined items resulted in an additional 6 basis point reduction in CET1 capital, and a total reduction of 19 basis points. 

"Although these changes weren't a surprise, their late arrival is likely to muddle consensus estimates and complicate result interpretation, which is generally unfavourable in the eyes of investors," it said.

Motley Fool contributor Samantha Menzies 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 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.

More on Bank Shares

Frustrated and shocked business woman reading bad news online from phone.
Bank Shares

Market alert: 2 major ASX bank shares could fall double digits

Investors may need to rethink if share prices reflect risks.

Read more »

Bank building with the word bank in gold.
Bank Shares

5 years ago, $10,000 bought 111 CBA shares. But how many would it buy now?

CBA has had a fruitful five years. Here’s how much capital growth it has delivered…

Read more »

woman in an office with their fists up after winning
Bank Shares

Guess which ASX 200 bank stock is pushing higher on Friday (hint, not CBA shares)

While the big four banks are slipping in Friday morning trade, this ASX 200 bank stock is pushing higher. But…

Read more »

A woman wearing a yellow shirt smiles as she checks her phone.
Bank Shares

Judo Capital reaffirms FY26 profit guidance as lending growth continues

Judo Capital reaffirms its FY26 profit guidance after strong Q3 lending growth and stable asset quality.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Bank Shares

Why I think investors should buy and hold CBA shares for 10 years

Buying a premium share can feel uncomfortable, but quality often comes at a price.

Read more »

Time to sell written on a clock.
Broker Notes

Sell alert! Why this expert is calling time on CBA shares

A leading analyst forecasts headwinds for CBA shares. But why?

Read more »

Red sell button on an Apple keyboard.
Broker Notes

Sell alert! Why this expert is calling time on Bendigo Bank shares

A leading analyst believes the months ahead could be tricky for Bendigo Bank shares.

Read more »

A man in a suit smiles at the yellow piggy bank he holds in his hand.
Bank Shares

How does Morgans rate ANZ, BOQ, CBA, NAB, and Westpac shares?

Is it bullish or bearish on the big four? Let's find out.

Read more »