Here’s why the CBA share price could soon be in for some pain

Is it buy or sell for CBA shares today?

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Key points

  • Commonwealth Bank of Australia remains a popular ASX investment
  • The bank has been giving investors some good returns in recent years too
  • But here's why two ASX brokers reckon the good times might come to an end

The Commonwealth Bank of Australia (ASX: CBA) share price is one of the most widely followed on the S&P/ASX 200 Index (ASX: XJO).

That could be for one or more of several reasons. CBA’s old status as the biggest share on the ASX perhaps. Or its place as the largest of the ASX’s big four banks, and with the most market share. It could even be due to the fact that CommBank used to be a government-owned company.

Whatever the reason, the bank is a popular flagship share of the ASX 200. This is why many investors might find the idea of the CBA share price falling a painful one. Investors have been used to some decent returns from Commonwealth Bank shares. This was a bank that rose more than 20% last year, after all. Over the past five years, CBA shares remain up almost 30%. And that’s not including the generous dividends (and franking credits) that have been paid along the way.

But perhaps the good times are coming to an end, at least for a while. That’s the view of more than one broker on the ASX. So is it buy or sell for the CBA share price today?

CBA share price: Buy or sell?

Well, broker Goldman Sachs is firmly in the latter camp. Goldman has rated the bank as a sell for a while now. As my Fool colleague James covered recently, it has recently raised its 12-month share price target to $89.86, while maintaining its sell rating. If that were to play out, CBA shares would be facing a fall of around 13% over the next year.

Goldman reckons the CBA share price is just too expensive and notes that the bank I “more exposed to sector-wide headwinds” than its rivals.

Brokers at Macquarie largely agree. Macquarie also has a bearish ‘underperform’ rating on CBA shares right now. As we covered last week, the investment bank has a $90 share price target to match its underperform rating.

Macquarie also believes CommBank shares are expensive, and reckons the bank could struggle to match the performance of its rivals going forward, and thus shouldn’t be commanding today’s share price premium.

Perhaps that’s not what CBA investors might want to hear today, but that is the view of two of the ASX’s most prominent brokers. Time will only tell if their predictions turn out to be accurate.

At the current CBA share price, this ASX 200 bank has a market capitalisation of $174.53 billion, with a dividend yield of 3.63%.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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