The S&P/ASX 200 Index (ASX: XJO) is trending higher on Thursday as a run of bumper FY26 results draws investors back into the market. But Westpac Banking Corp (ASX: WBC) shares are travelling in the other direction.
At the time of writing on Thursday afternoon, Westpac shares are down around 2% to $33.86 a piece. It's not a significant daily decline, but it comes off the back of a string of share price falls following the bank's quarterly update earlier this month.
On Monday last week, Westpac shares fell around 6% after it announced third-quarter net profit of $1.8 billion, excluding notable items. Its net interest margin was stable at 1.89%.
The banking giant also reported moderate loan and deposit growth, but noted that mortgage application volumes declined thanks to stronger competition and interest rate uncertainty.
Westpac also said it expects margins to come under more pressure in the near term.
Westpac is the most mortgage-exposed of the big four bank shares, with approximately 69% of its loan book in residential mortgages. So, the news has raised concerns about the bank's financial future.
Investors were spooked by the update, quickly selling off their shares in the bank. And the sell-off has continued through to the time of writing.
Westpac shares are now down around 11% since it posted its quarterly update, and down 13% since early August. The latest sell-off in Westpac shares has also left the stock down around 13% for the year to date and 12% lower than this time last year.
Now investors are questioning whether the ASX bank shares can rebound or whether another share price crash is coming.
Here's what the experts think.
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Analyst outlook for Westpac shares over the next 12 months
Analyst sentiment is pretty bearish on Westpac shares, and it looks like, after the latest share price tumble, the shares are now considered to be trading around fair value.
Market Index data shows the majority of brokers have sell ratings on the shares. The $33.91 average target price now implies a potential 0.5% downside over the next 12 months, at the time of writing.
Sentiment is similar on TradingView data. Despite the 11% drop in the share price over the past 10 days, brokers still forecast further downside.
Out of 16 analysts, nine have a sell/strong sell rating on Westpac shares, and another six have a hold rating. The average $33.38 target price implies a potential 1% downside at the time of writing. Although there is a huge range between the maximum and minimum target prices.
Some tip the shares to fall another 16% to $28.41, while the more bearish of the bunch still think Westpac shares could climb another 33% to $45 a piece over the next 12 months.
