Westpac Banking Corporation (WBC) Share Trading Recommendation

Submitted by Craig Strzelecki on 20 February, 2007 - 14:55

Westpac Banking Corporation (WBC) have an upgraded Buy 1 share trading recommendation and a price target of $28 from analyst UBS. In the analysts' viewpoint WBC has under-performed the broader market by 19% (since Dec 04) and by 14% (since Dec 05). They attribute this lag to (1) its market share slippage (caution, systems and productivity) (2) poor communication of 2H06 numbers on conversion to IFRS (3) recent margin under-performance (4) poor trading income. However the analysts see see clear evidence of a turnaround under-way: (1) 5 mths into the 07 year, we now believe management guidance of 5-10bp off mgns (supported by good margin results from BEN-CBA) (2) YTD volume grth is now running at c.15% annualised (2% above peers) in a strong environment (3) back book to front book drag should ease (4) BDD environment benign (5) management outlook commentary positive. And actions as follows: (1) They upgrade their estimate of 07 margins from -14bp to -10bp. (2) They upgrade their volume growth assumption from 12.5% to 15%. (3) They maintain their cost growth assumption at 5%. (4) They increase their estimate of BDD charges slightly (faster credit card and corporate loan growth). They now forecast 07 EPS gwth of 11%(prev. 6.6%) and up 9% in 08. Their Buy 1 call is consistent with our recent Sector Overweight shift.

Westpac Banking Corporation Limited is listed on the Australian Stock Exchange (ASX) under stock code WBC. You can view their investor website here. WBC was listed on the ASX on 18 July, 1970. Find out the meaning of the recommendations in this primer. Ted Evans is the chairman of Westpac and the Managing Director is Dr David Morgan. Westpac provides banking, financial and related services. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade WBC. Check your charts and good luck with your share trading!

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