The Commonwealth Bank of Australia (ASX: CBA) share price is edging higher today, now trading at $94.42 at the time of writing — up 0.45%.
The bank started the year poorly, with shares faltering almost 7% into the red since the start of 2022 trading on 4 January. The benchmark S&P/ASX 200 Index (ASX: XJO) is down just over 3% during the same time.
Analysts have been calling for a pullback in the CBA share price for some time, with some noting it seemed overvalued relative to earnings and to the other banking majors throughout 2021.
But are analysts still as downbeat on the CBA share price? And what about its valuation given the recent market downturn? Let's take a look.
CBA is a sell, according to consensus
Overall sentiment on the bank's share price appears to be quite downbeat at present, judging from the list of analysts provided by Bloomberg Intelligence.
On that list, 11 brokers urge their clients to sell and/or short CBA shares whereas just 2 advocate it as a buy right now.
That equates to 88% of analysts having the CBA share price as a sell or hold right now – hardly a bullish outlook.
Most of the commentary is centred around the bank's valuation and the pressures on its profit margins as cost blowouts continue to plague its income statement.
Whilst JP Morgan forecasts the bank's revenue growth "to be towards the top end of peers in FY23/24", it notes ongoing costs will likely cap profits and earnings per share (EPS) relative to peers.
It also forecasts CBA's net interest margin (NIM) to contract over the coming periods, in line with NIM headwinds for the broad sector.
Moreover, JP Morgan continues to be put off by the bank's "very expensive valuation" given its shares are still trading at 20x price to earnings (P/E), down from 22x P/E a month ago.
Goldman Sachs also reckons that CBA's NIM will be in hot focus in its upcoming earnings release. Goldman is forecasting a 16 basis point decline in the bank's NIM this period.
"This is amplified by the disproportionate share of mortgages that are currently going into fixed rates," the broker noted to clients in an update recently.
As a result of this, Goldman trimmed its price target on CBA by 2% to $80.94, retaining its sell recommendation in the process.
Not only that, but the consensus price target on CBA shares is currently at $93 and change – suggesting a downside potential of almost $1 per share.
Morgans is the most bearish and values the bank at $74 per share, whereas Jefferies and Jarden are the only two brokers standing apart from the pack. In recent updates, they assigned price targets of $108 and $100 per share respectively.
CBA share price snapshot
In the last 12 months, the CBA share price has held gains and climbed more than 6% but is losing ground amid the recent weakness.
This year to date, things aren't so rosy with the CBA share price down almost 7% so far in 2022, after tanking more than 8% in the last month of trading.
