Analysts mixed on NAB first-half earnings
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The news: Analysts were mixed on NAB's first-half results, released on Thursday, with UBS and Citi maintaining their rating on the stock as 'sell' and Goldman Sachs sticking to 'buy'.
The numbers: UBS analysts kept their 'sell' rating on NAB but increased their price target from $28 per share to $30. Citi analysts also maintained their 'sell' rating but upped their target price, from $25.75 to $26.50.
Macquarie analysts left their 'underperform' rating and target price of $32.50 unchanged.
Morgans analysts lowered their target price from $29.97 to $29.94, and "only just" kept their 'hold' rating on the stock. They noted investors could consider trimming overweight positions on NAB.
On a more positive note, Goldman Sachs and Jarden analysts reaffirmed their respective 'buy' and 'overweight' ratings for NAB. Goldman lifted its target price from $33.89 to $34.04, while Jarden also upgraded their target price from $33.80 to $34.
NAB shares were up 0.5% to $34.47 at 1:30pm AEST.
The context: Analysts broadly agreed that NAB's result of $3.48 billion, down 3% half-on-half and 13% year-on-year, was around market consensus.
However, of those maintaining 'sell' ratings on NAB, UBS analysts said the group's standalone retail business was "hamstrung" by funding cost and distribution disadvantages, as well as investment spend "which may need to increase from here".
Citi analysts said that NAB's profit mix has skewed higher to business and corporate banking which would leave it disproportionately impacted relative to its peers as business credit slowed while housing remained resilient. The combination of slowing growth and rising costs "looks challenging", they said.
Goldman Sachs analysts, meanwhile, were reassured by NAB's strong asset quality, capacity for loan growth in the commercial sector, and effective cost management in an elevated inflationary environment.
Likewise, Jarden's positive view was reinforced by easing margin pressures, excess provisions that may support earnings in FY25, and an optimistic outlook for credit growth.
The sources: UBS research, Jarden research, Goldman Sachs research, Morgans research, Citi research, Macquarie research
