ANZ’s Share Price up 1.15% Today on Analyst Upgrade

Australia and New Zealand Banking Group [ASX:ANZ] shares were up by 1.15% early this morning.

With the bulk of the royal commission done and dusted, it seems that the market is finally offering the big four some respite. The share price of competitor National Australia Bank Ltd [ASX:NAB] has also seen a rise this morning by 1.40%.

It’s possible the bump up for ANZ, in particular, is a result of a note from Morgans. The broker recently upgraded the ANZ stock to ‘add’ from ‘hold’.

Why is the broker recommending ANZ?

Analysts at Morgans believe there are several reasons to have faith in ANZ again.

First, stimulus initiatives announced by APRA (Australian Prudential Regulatory Authority) will de-risk the earnings outlook for the sector.

The initiatives support an additional capital add-on of $500 million for operational risk to be applied until the banks have completed their planned remediation.

Morgans believes this will be positive for system credit growth and asset quality. Also, that major banks will become more tempting to investors from a yield perspective in the wake of government bond yields falling.

Secondly, the broker upgraded ANZ’s shares on valuation grounds after some share price weakness over the last few weeks. Morgans set the target at a steady $29.

What’s next for ANZ?

Could things be looking up for the banks?

It would seem that way. The last five years have been pretty miserable for the big four, but those times could soon be coming to an end.

Economists at ANZ recently predicted that house prices were going to grow by the end of the year. If this comes true, it would only serve to help ANZ’s fortunes.

ANZ is the only major ASX bank to have recently done a share buy-back. This decision could have served the banking giant well.

But the fact remains that it’s a tough market to be in, and competition remains high. The volatility of the market means this stock will tread a path anything but predictable in the coming years.


Ryan Dinse,

For Money Morning

PS: Tired of the media frenzies and seeking fat profits instead? Check out this FREE report including the five top dividend stocks on the ASX today. Click here to download.


Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

Money Morning Australia