Are CBA shares a buy? Here’s what analysts say

There’s a disconnect between market sentiment and analyst sentiment for CBA.

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Key points

  • CBA shares have clawed back gains after prices whipsawed back towards 52-week highs in recent weeks 
  • Analysts aren't as constructive on the CBA share price and the majority of coverage rates it a sell 
  • In the last 12 months, CBA shares have spiked around 18% higher 

Shares of banking major Commonwealth Bank of Australia (ASX: CBA) are tracking lower today at $104.99.

After a wavy run this past half-year, CBA shares are now back within their 52-week highs and are now up around 4% for the year.

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Are CBA shares a buy?

It appears that analyst sentiment has shifted towards CBA, with the majority of coverage now rating it a sell.

According to Bloomberg data, 10 firms rate CBA a sell at present, 4 a hold, with the remainder saying to buy. Two of those are Jefferies and Bell Potter, valuing the bank at $116 and $108 per share respectively.

However, the consensus price target from this entire list is $95.31 per share, suggesting a potential downside target if these brokers are right.

Analysts at Morgan Stanley aren’t so sure about CBA and urge their clients to sell shares at the time of writing. The broker values CBA at $92 per share and reaffirmed its underweight rating in a recent note.

It was quick to point out that CBA’s mortgage growth has slowed in 2022, something it reckons stems from increasing competition and higher funding costs in the segment.

Morgan Stanley also highlights that CBA no longer benefits from the $51 million term-funding facility provided by the RBA either, a lower-cost source of funding than traditional measures.

During the “price war of 2021” it was this term-funding facility that “supported above system loan growth” throughout the year, the broker says.

JP Morgan has followed a similar vein in its review of CBA, advocating clients to sell or reduce their exposure.

The firm values CBA at just $94 per share, a 10% downside target at the time of writing. It too noted the pressures from mortgage markets, and expects banks such as CBA “to face greater [net interest margin] NIM pressure in the short-term than NAB/ANZ”.

In the last 12 months, CBA shares have spiked around 18% higher and are up 4% this year to date.

Motley Fool contributor Zach Bristow 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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