Merrill Lynch Sees A Value Idea In Westpac

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By Rudi Filapek-Vandyck

Banking analysts at Merrill Lynch have the habit of suggesting a trading idea for each new week. This week they put forward a "value idea" as a lagging Westpac (WBC) share price has now made it the cheapest bank in the country.

The analysts’ observation confirms FN Arena’s story on the sector last week (Australian Banks: Increasingly A Case Of Dividends, 11/07/06) which showed that Westpac now has the highest ranking in the sector on FN Arena’s Sentiment Indicator while the suggested gap between share price and average price target suggested the highest upside potential from here on.

Merrill Lynch has not changed its preferences in the sector, still preferring St George Bank (SGB) as the number one banking exposure, second comes Westpac (WBC), third place is for ANZ (ANZ), fourth is National Australia Bank (NAB) and Commonwealth Bank (CBA) closes the ranks of the majors.

Bendigo Bank (BEN) is the broker’s preferred regional bank, with Adelaide Bank (ADB) coming second and Bank of Queensland (BOQ) third.

The order of preferences is not in line with the rest of the market (see abovementioned story from last week).

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