The Commonwealth Bank of Australia (ASX: CBA) share price is pushing higher with the market on Wednesday.
In morning trade, the shares of Australia's largest bank are up 0.5% to $94.44.
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Is the CBA share price good value?
Unfortunately for shareholders, one leading broker doesn't see any value in the CBA share price at the current level. In fact, its analysts believe the bank's shares should be trading notably lower than where they are today.
According to a note out of Goldman Sachs this morning, its analysts have retained their sell rating and $82.57 price target on its shares.
Based on the current CBA share price, this implies potential downside of 12.5% for investors over the next 12 months before dividends.
Why is Goldman bearish on CBA?
Following a review of the banking sector, Goldman Sachs has highlighted three key reasons for its bearish stance on the CBA share price.
These include the margin pressures it is facing from aggressive competition for mortgages, its investments, and the premium the bank's shares trades on compared to its big four bank peers.
Goldman Sachs explained: "While CBA remains the preeminent retail banking franchise in Australia, its 1Q22 trading update highlighted that even it is not immune from the profitability pressures that are currently particularly evident in mortgages (competition and mix). Furthermore, while CBA's commitment to investment is the right thing for the franchise in the medium term, we believe it provides it with less flexibility to offset these revenue headwinds."
"Therefore, with our FY21-24E PPOP CAGR now 1% p.a, versus its peers at c. 5%, we struggle to justify the current 60% P/PPOP premium it trades on versus its peers (25% 15-year average)," the broker concluded.
