Much to the dismay of its shareholders, the performance of the Commonwealth Bank of Australia (ASX: CBA) share price has been a major disappointment over the last 12 months.
During this time the banking giant's shares have fallen a sizeable 12%.
This decline has been the result of selling pressure caused by the Royal Commission, the Federal Government bank levy, and a breach of anti-money laundering and counter-terrorism financing laws.
Has it bottomed?
Unfortunately for shareholders, two leading brokers are not convinced that the declines are over for its shares.
Both Citi and Morgan Stanley have retained their sell ratings on the shares of Australia's largest bank following its decision to demerge its wealth management operations.
According to a note out of Citi, it has retained its sell rating and $72 price target. Citi appears to believe that CommBank no longer deserves to trade at a premium to banking peers such as Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ).
Rival investment bank and brokerage firm Morgan Stanley is a lot more bearish on the bank.
Whilst it sees positives in the demerger, it does not change things enough to warrant any revisions to its rating or lowly price target of just $64.00. This price target implies further downside of almost 12% from the last close price.
Morgan Stanley is bearish on Commonwealth Bank and the rest of the big four due to concerns that the bank super cycle is coming to an end.
It has pointed to downgrades in loan growth forecasts, increasing compliance costs, responsible lending pressure, and a housing market downturn as reasons to be concerned.
Should you sell your CommBank shares?
Whilst I wouldn't be a seller of CommBank shares if I owned them due to its generous dividend, I wouldn't be a buyer unless they came down to a lower level that provides a more compelling risk/reward.
