Broker tips Westpac (ASX:WBC) share price to keep on rising

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The big four banks have been out of favour with investors over the last few years due to the Royal Commission and then the COVID-19 pandemic.

Well, it appears fair to say that the banks are well and truly back in favour with investors now. For example, the Westpac Banking Corp (ASX: WBC) share price is up a stunning 36% since the start of the year.

That’s a return that a rapidly growing tech share like Afterpay Ltd (ASX: APT) would be proud of, let alone Australia’s oldest bank.

Can the Westpac share price still go higher?

The good news is that it may not be too late to invest, with one leading broker tipping the Westpac share price to continue its ascent.

According to a note out of Citi from last month, Westpac remains its sole buy in the sector. The broker currently has a buy rating and $29.50 price target on its shares.

Based on the latest Westpac share price, this implies potential upside of 11% over the next 12 months excluding dividends.

And with Citi forecasting dividend yields of approximately 4.4% in FY 2021 and 4.5% in FY 2022, this potential return stretches beyond 15%.

What did Citi say?

Commenting on Westpac’s half year results, the broker said: “The market received WBC’s 1H21 result positively, with core earnings upgrades near-term from a better than expected NIM; and over the medium term, from lower costs. WBC’s target for FY24 costs of $8bn was lower than we anticipated, and management are confident and ambitious.”

“We see many of the building blocks in place for the strategy, even if obvious sensitivities prevent their more fulsome disclosure. The premise of multi-year core earnings upgrades, layered on sector-wide asset quality improvements, leave WBC with a differentiated investment thesis. It remains our sole Buy in a sector that has rallied strongly in the COVID recovery,” it concluded.

Food for thought for investors looking for banking sector options.