MRE: Westpac Banking Corporation (WBC) Recommendation

Westpac Banking Corporation (WBC) have outperformed the bank sector and the market (XJO) over the past two months and there is speculation of an increasing dividend payout ratio. Westpac (WBC) is reporting its 1H06 result this Thursday, 4 May, and Macquarie Research Equities (MRE) believes that, given this good run of Westpac's share price, "a good deal of any share price upside may already be priced in to the stock (buy on the rumour, sell on the fact)", and hence unlikely to surprise on the upside. Westpac (WBC) is trading in line with MRE’s 12 month price target of $25.00, and MRE have reduced their recommendation to Neutral, while WBC remains MRE’s third pick in the banks sector (behind ANZ and CBA). "Further share price momentum could be gained by an improvement in retail banking momentum." MRE also notes that there may be continued buying support from investors chasing high yield as the current yield of Westpac is 4% with 100% franking.