CBA shares: Buy, hold, or fold?

Here's what brokers are expecting from stock in the ASX's biggest bank.

Key points
  • The CBA share price has once again cracked the $100 mark in early trade today, recovering from its September slump
  • But most brokers are sceptical on its outlook
  • While one top broker tips the ASX 200 banking giant's stock to gain 3% amid rising dividends, another believes it could tumble 14%

The Commonwealth Bank of Australia (ASX: CBA) share price is back over the $100 mark in early trade on Wednesday.

The $169 billion S&P/ASX 200 Index (ASX: XJO) giant plummeted 7% over the course of September – known to be the worst month for markets. It's since picked itself up by the bootstraps, lifting 10% so far this month.

The CBA share price closed at $99.78 on Tuesday and, at the time of writing, is $100.69, a rise of 0.91%.

But with such a recovery under its belt, does the banking giant's stock still offer investors upside?

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.

Image source: Getty Images

Is now a good time to buy CBA shares?

CBA is the ASX 200's biggest bank and a resoundingly popular share. But optimistic experts are few and far between.

JP Morgan is said to believe the banking giant "offers the best leverage to rising rates and has the most defensive loan book". For that reason, the broker commented:

We struggle to see CBA underperforming its peers meaningfully.

Rate hikes, like the six implemented by the Reserve Bank of Australia (RBA) this year, let banks reprice their loan offerings, thereby increasing their net interest margins (NIM) and, in turn, their profits. Though, rising rates also bring risks for banks' loan books.

On a less positive note, CBA is JP Morgans' least preferred ASX 200 bank, as my Fool colleague Bronwyn reports.

Turning to other brokers, Credit Suisse had a $102.80 price target and a neutral rating on the biggest bank's stock late last month, my colleague James reports. That represents a potential 3% upside.

The broker also expects CBA to grow its dividends, tipping it to pay out $4.25 per share in financial year 2023. That would mark a 10% increase on the $3.85 per share CBA paid in financial year 2022.

Turning to the bears, Goldman Sachs rates the stock a sell while Morgan Stanley is said to have slapped it with an $85.50 price target, according to Livewire, representing a potential 14% downside.

Morgan Stanley is also said to be sceptical of the entire banking sector, expecting rate hikes and fiscal consolidation to continue for longer than previously predicted.

Finally, as my Fool colleague Zach covered in depth yesterday, CBA is both the most profitable ASX 200 bank share and the most expensive. It's trading with a price-to-earnings (P/E) ratio of around 18.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper 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 and JPMorgan Chase. 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 Scott Phillips.

More on Broker Notes

A woman in a red dress holding up a red graph.
Broker Notes

Bell Potter has tipped these ASX small caps to almost double in value

Big things could lie ahead for these two very different companies.

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today.
Broker Notes

Austal, BHP, Westpac shares: Buy, sell, hold

One ASX share is forecast to jump 28% higher.

Read more »

A man holding a cup of coffee puts his thumb up and smiles with a laptop open.
Broker Notes

Morgans names 3 ASX shares to buy now

The broker is feeling bullish about these names. Let's find out why.

Read more »

Man with hand to his forehead looking at his laptop.
Broker Notes

Buy, hold, sell: Deep Yellow, PLS, Pro Medicus shares

Morgans has given its verdict on these shares. Here's how it rates them.

Read more »

A woman wearing a black and white striped t-shirt looks to the sky with her hand to her chin, contemplating buying ASX shares.
Broker Notes

Buy, hold, sell: Bank of Queensland, Champion Iron, Resmed shares

Let's check out some new ratings from Bell Potter, Ord Minnett, and Morgans.

Read more »

Man looking at the side of an aisle at items in a grocery store.
Broker Notes

Which ASX retailer is a better buy, Coles or Woolworths?

In the battle of the major supermarket retailers, one currently stands out.

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated.
Broker Notes

Buy, hold, sell: Sigma Healthcare, Collins Foods, IKO ETF shares

Let's review some newly-released ratings from the experts this week.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Buy, hold, sell: Cleanaway Waste Management, New Hope Corporation, CSL shares

Let's check out some new ratings on ASX shares today.

Read more »