Leading broker slaps $89 target on CBA (ASX:CBA) share price

Analysts don't think CBA shares are worth the $100 label, here's why…

| More on:
young woman reviewing financial reports at desk with multiple computer screens

Image Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Commonwealth Bank of Australia (ASX: CBA) share price has been contending with the $100 mark for the last couple of months.

Yesterday, the banking giant's shares reclaimed the century price tag. Though, the latest broker notes indicate the triumph may be brief for CBA investors.

What brokers are saying about the CBA share price?

Despite blazing a 45% share price gain over the past year, some analysts aren't looking favourably on CBA.

According to a recent note, Morgan Stanley analysts have retained their underweight rating and price target for this banking giant's shares. The broker's price target represents roughly a 12% indicative downside to the current CBA share price.

The broker expects a solid result from Australia's largest bank later this month, but it has concerns over the current lockdowns, with outlook commentary potentially shaky at best.

Additionally, Morgan Stanley considers CBA to be expensive with it trading on a price-to-earnings ratio (P/E) of 27.1. Whereas the average P/E ratio for Australian banks is around 15.7. Analysts from the investment bank suggest investors look elsewhere for 'value'.  

Earnings just around the corner

The CBA share price will come into focus next week as the company gets set to report its FY21 results. The big four bank will release its full-year financials on Wednesday 11 August.

According to Bloomberg, net profit after tax is estimated to be $9.57 billion with dividends of $2.09 per share. However, we will have to wait to see what CBA reports and how the share price reacts.

Motley Fool contributor Mitchell Lawler owns shares of Commonwealth Bank of Australia. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Bank Shares

A corporate female wearing glasses looks intently at a virtual reality screen with shapes and lights representing Block shares going up today
Bank Shares

Are Westpac shares a buy following the bank's big tech update?

Is now a good time to buy the banking giant's shares? Let's find out.

Read more »

Different Australian dollar notes in the palm of two hands, symbolising dividends.
Bank Shares

Own CBA shares? It's payday for you!

A dividend is heading to CBA shareholders’ bank accounts.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Bank Shares

Are CBA shares really worth $120?

It has been a good year for ASX bank shareholders.

Read more »

a group of people sit around a computer in an office environment.
Bank Shares

Westpac shares push higher on $9.8b technology simplification plan

Westpac plans to spend big on technology to close the gap on its rivals.

Read more »

A worried woman looks at her phone and laptop, seeking ways to tighten her belt against inflation.
Economy

NAB boss issues dire prediction for Aussie economy

NAB’s CEO has issued a stark warning on the outlook for Australia’s economic growth.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Own CBA shares? Here's the tech stock the banking giant just invested in

CBA has made an interesting investment. Here's what you need to know.

Read more »

A woman gives two fist pumps with a big smile as she learns of her windfall, sitting at her desk.
Bank Shares

ANZ shares charge higher on $57.5 million class action settlement news

ANZ shares have continued their positive run on Monday.

Read more »

Two people comparing and analysing material.
Bank Shares

Better buy: CBA or Westpac stock?

Which ASX bank share is a better buy?

Read more »