Top broker tips CBA (ASX:CBA) share price slide to $80

Is the CBA share price too expensive?

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The Commonwealth Bank of Australia (ASX: CBA) share price has been a very strong performer in 2021.

Since the start of the year, the banking giant’s shares have risen a sizeable 25%.

This is more than double the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.

Where next for the CBA share price?

Unfortunately for shareholders, a number of leading brokers believe the CBA share price is overvalued and have the equivalent of sell ratings on the company.

One of the most bearish brokers is Morgans. According to a recent note, its analysts have a reduce rating and $80.00 price target on the shares of Australia’s largest bank.

Based on the current CBA share price of $105.10, this suggests there’s potential downside of almost 24% over the next 12 months.

What is being said?

The note reveals that Morgans believes CBA is a quality bank, it just feels its shares are overvalued at the current level.

The broker has previously stated: “While we continue to believe that CBA has a relatively high quality retail franchise and a relatively good risk profile, we continue to believe that CBA is expensive relative to the other major banks.”

Elsewhere, earlier this month the team at Morgan Stanley retained their underweight and $90.00 price target on the bank’s shares.

Its analysts note that CBA has significant exposure to housing loans. In fact, it estimates that approximately 60% of its total loan balance relate to home loans.

In light of this, home loan approvals are a key driver of loan growth for the bank. So, with APRA recently increasing bank loan serviceability expectations, it fears this could weigh on CBA’s performance if it leads to lower home loan approvals.

Investors may not have to wait long to find out if this is the case. The banking giant is scheduled to release its first quarter results in the middle of next month. All eyes will be on the CBA share price that day.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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