Morgans fails to identify any major positive surprises within National Australia Bank's FY24 results to justify recent share price strength.

The broker makes -6-8% downgrades to FY25-27 cash EPS forecasts. Cash EPS was in line with expectations in the second half, supported by an unexpected reduction in the effective tax rate.

Return on equity (ROE) fell by -20 bps in the second half, and the broker considers the quality of revenue to have declined, with a higher percentage contribution from the Markets & Treasury (M&T) division.

As the dividend payout ratio approaches the top end of the 65-75% target range, Morgans assumes the DPS will be held flat at 85 cps per half for now.

The target price falls to $29.45 from $31.48. Reduce.

Sector: Banks.

Target price is $29.45.Current Price is $39.33. Difference: ($9.88) - (brackets indicate current price is over target). If NAB meets the Morgans target it will return approximately -34% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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