WBC dominated the stock news yesterday after disappointing the market and subsequently being punished 7% making fresh 9-month lows in the process. The positives of a $3.5bn buyback and 60c fully franked dividend couldn’t mask the issues under the hood:
- Higher costs and weaker margins are an unhealthy combination but there is a turnaround underway, it simply comes down to whether or not we believe it’s making sufficient progress.
We have been targeting the $23 as an optimum area to buy WBC and that still looks reasonable i.e. another 3-3.5% lower and we see value plus an enticing dividend of around 5%.
MM likes WBC around $23
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The obvious thought is should we switch our CBA to WBC if we see another few percent stretch in their differential, our view is definitely not yet especially as the quality bank seasonally outperforms WBC right through Q4 i.e. don’t fight both the tape and seasonality factors but potentially worth revisiting in 2022 if the elastic band continues to stretch.
MM is not going to switch CBA to WBC
