The Commonwealth Bank of Australia (ASX: CBA) share price is trending higher in early afternoon trade, up 0.42%.
But this could be just the tip of the share-price-gains iceberg for CBA and the rest of the big four banks over the coming six months.
Could the banking giant’s value surge over the next 6 months?
The Commonwealth Bank share price is in the spotlight today, along with the wider ASX banking sector.
This comes following a price forecast from David Cassidy, head of Australian equity strategy at Wilsons Advisory. Cassidy forecasts that the ASX banks could see significant more share price upside over the coming six months as investors continue to rotate into beaten-down value shares.
As the Australian Financial Review reports, Cassidy believes that, if this scenario remains in play, bank shares could gain 15% from their current levels, for a 20% annual gain.
Atop the rapid economic recovery underway in Australia, which should lead to earnings upgrades and higher dividend yields, Cassidy believes banks have “over-provided for the risks of COVID-19” and that “these provisions will likely be wound back in the next year”.
Although Wilsons is “avoiding Commonwealth Bank of Australia on relative valuation grounds”, Cassidy is bullish on the banking sector, saying:
The worst is behind the banks from a regulatory perspective… We believe there is still more runway for the banks, with an improved economic and regulatory backdrop than pre-COVID-19.
Cassidy added, “Over the next 6 months, investors will be asking more from bank management teams around strategic initiatives to grow earnings in a post-COVID-19, post-royal commission environment.”
Commonwealth Bank share price snapshot
The Commonwealth Bank share price is up by around 38% over the past 12 months, outpacing the 27% gain posted by the S&P/ASX 200 Index (ASX: XJO).
Year to date, CBA shares have gained around 4%. The ASX 200 listed bank pays a dividend yield of 2.9%, fully franked.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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