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On Tuesday, Citi analyst Thomas Strong updated the rating for Australia & New Zealand Banking Group (OTC:ANZGY) (ANZ:AU) (OTC:ANZBY), shifting from a Sell to a Neutral stance, while also increasing the price target to AUD27.50, up from the previous AUD25.25. The revision reflects a reassessment of the bank’s value in light of its current performance and market position.
Strong’s commentary highlighted the bank’s trading at a one-year forward price-to-book (P/B) multiple of 1.1 times, which stands at a 5% discount compared to its ten-year average. This valuation adjustment is part of Citi’s updated cost of equity (CoE)-derived valuation methodology. The new price target is based on several key assumptions: a terminal return on equity (ROE) of approximately 10%, a cost of equity of 9.4%, and a terminal growth rate of 4.5%.
Despite ongoing strategic uncertainties surrounding Australia & New Zealand Banking Group, Strong noted the bank’s progress with ANZ Plus and the migration of the SUN platform onto ANZ Plus. These developments suggest that the bank is following a clear trajectory.
The upgraded rating and price target are indicative of the bank’s current market valuation and the perceived direction of its business strategy. The analyst’s statement points to a cautiously optimistic view of the bank’s future, acknowledging both its achievements and the challenges that lie ahead.
Investors and market watchers will be keeping an eye on Australia & New Zealand Banking Group as it continues to navigate its strategic initiatives and responds to the evolving financial landscape. The upgrade by Citi provides a fresh perspective on the bank’s stock and its potential moving forward.
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