ANZ: Mixed Broker Views And Payments JV Outcome Will Shape Forward Fairness

The analyst price target for ANZ Group Holdings has shifted slightly lower to around A$37.07. Analysts point to modest adjustments to revenue growth assumptions and the forward P/E multiple, partly offset by a slightly higher profit margin outlook and recent mixed broker views, including a downgrade to Neutral at A$38.14.

Analyst Commentary

Recent research on ANZ Group Holdings highlights a split in analyst opinion, with JPMorgan turning more positive while Goldman Sachs has shifted to a Neutral stance. This mix of views is feeding into the modest adjustment in the consensus price target and shaping how investors are thinking about valuation, growth and execution risk at current levels.

Bullish Takeaways

Bullish analysts see room for upside to the current A$37.07 price target, pointing to areas where profitability assumptions, including margin expectations, have been tweaked higher despite revenue headwinds.
The recent upgrade at JPMorgan signals increased confidence in ANZ's ability to execute on its plan at a P/E multiple that some bulls view as still reasonable relative to their earnings assumptions.
Supportive views highlight that mixed broker sentiment can create entry points when expectations look balanced rather than overly optimistic.
Some bulls frame the A$38.14 reference level as a marker that, if execution is solid, could justify a valuation closer to the upper end of recent analyst ranges.

Bearish Takeaways

Bearish analysts focus on revenue headwinds, arguing that softer top line assumptions limit scope for re rating, especially if growth in core banking activities does not offset these pressures.
The downgrade to Neutral at A$38.14 reflects concern that the current valuation already prices in a fair amount of good news, which can cap near term upside if earnings do not deliver against forecasts.
Cautious views point out that multiple changes to growth and margin assumptions, even if modest, introduce execution risk that could weigh on sentiment if results track the lower end of expectations.
Some bears see the recent mix of upgrades and downgrades as a sign that ANZ is moving into a more finely balanced risk reward zone, with less room for error on costs, asset quality and capital deployment.

What's in the News

Speculation is building that ANZ Group Holdings may move to buy out Worldline SA's 50% stake in their A$925 million merchant payments joint venture after a year-long review reportedly concluded the partnership is not workable for the Australian market (Key Developments).
Private equity groups, including Brookfield and Bain Capital, are reported to have reviewed the joint venture but were understood to walk away after being unable to make the economics work, leaving ANZ as a potential buyer of Worldline's share (Key Developments).
One issue flagged in reports is that Worldline's European banking technology stack is said to be poorly suited to Australia, while ANZ is understood to want to retain direct ownership of customer relationships in merchant acquiring (Key Developments).
The review process has involved Macquarie Capital and may shift to Jefferies following the move of former Macquarie Capital banker Laura Golis. Media reports link the process to Worldline's broader challenges after a fraud scandal that was followed by a 38% share price fall (Key Developments).
ANZ welcomed former CEO Shayne Elliott's decision to discontinue legal proceedings related to his 2025 remuneration outcomes. The bank stated that no payments or commitments were made and that both parties will bear their own costs (Key Developments).

Valuation Changes

Fair Value: A$37.07, down slightly from A$37.60, reflecting a modest recalibration of assumptions.
Discount Rate: 7.84%, effectively unchanged from the prior 7.84%, indicating a steady required return input.
Revenue Growth: 3.62%, slightly lower than the previous 3.71%, pointing to a more cautious A$ revenue outlook.
Net Profit Margin: 33.77%, up marginally from 33.69%, signalling a small uplift in expected profitability.
Future P/E: 17.16x, trimmed from 17.40x, suggesting a modestly lower valuation multiple applied to earnings estimates.

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Key Takeaways

Successful Suncorp acquisition and platform innovations expected to enhance revenue, market share, and net margins through increased efficiency and cost savings.
Digital investments and AI-driven customer engagement initiatives position ANZ for improved growth and profitability in digital transactions and financial services.
Regulatory scrutiny and technology investments may increase costs, while competition and economic uncertainties could challenge revenue and earnings growth projections.

Catalysts

About ANZ Group Holdings

Provides various banking and financial products and services to retail, individuals and business customers in Australia and internationally.What are the underlying business or industry changes driving this perspective?

The completion of the Suncorp Bank acquisition is expected to yield larger and earlier synergies than initially planned, enhancing scale and growth in Queensland, which should positively impact revenue and net margins.
A significant shift towards a lower-cost, dual platform system with ANZ Plus and Transactive aims to improve efficiency, reduce costs, and allow faster roll-out of new products, which is projected to increase market share and positively impact net margins.
The launch of ANZ Plus and the integration of financial well-being features, along with generational AI enhancements, could drive higher customer engagement and acquisition, resulting in increased revenue.
The continued investment in digital platforms and payments innovation, including Transactive Global and ANZ Pay 2, positions the company to leverage increasing volumes in digital transactions, potentially enhancing revenue and profit margins.
The strategic move to a simpler, automated operation with projected decommissioning of legacy systems from 2026-2028 is anticipated to bring substantial cost savings, contributing to improved earnings over time.

ANZ Group Holdings Earnings and Revenue Growth

ANZ Group Holdings Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming ANZ Group Holdings's revenue will grow by 3.6% annually over the next 3 years.
Analysts assume that profit margins will increase from 27.1% today to 33.8% in 3 years time.
Analysts expect earnings to reach A$8.2 billion (and earnings per share of A$2.71) by about March 2029, up from A$5.9 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as A$9.1 billion.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 17.2x on those 2029 earnings, down from 18.6x today. This future PE is greater than the current PE for the NZ Banks industry at 16.0x.
Analysts expect the number of shares outstanding to grow by 0.4% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.84%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Regulatory expectations and community scrutiny on the banking sector in Australia, as inferred from the company’s acknowledgements, could lead to increased compliance costs impacting net margins.
The reliance on technology platforms such as ANZ Plus and Transactive, with significant investments, carries execution risk and could potentially delay cost-efficiency benefits from migrating customers and maintaining earnings.
Intense competition within the retail banking space and pressure on maintaining net interest margins, particularly given the rise of broker-sourced loans, might impact revenue growth.
Macroeconomic uncertainties, including interest rate changes and credit provisions, might unfavorably affect earnings given the bank's substantial lending and deposit operations.
Integration and synergy realization from the Suncorp Bank acquisition may take longer than anticipated, potentially affecting anticipated cost synergies and revenue growth projections.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of A$37.07 for ANZ Group Holdings based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$43.0, and the most bearish reporting a price target of just A$32.65.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be A$24.2 billion, earnings will come to A$8.2 billion, and it would be trading on a PE ratio of 17.2x, assuming you use a discount rate of 7.8%.
Given the current share price of A$36.49, the analyst price target of A$37.07 is 1.6% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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