If you are looking for exposure to the banking sector, then Commonwealth Bank of Australia (ASX: CBA) and Macquarie Group Ltd (ASX: MQG) shares might be on your shortlist.
But which ones of these two ASX bank stocks is the better buy? Let's see what analysts at Ord Minnett are saying about these giants.
Image source: Getty Images
Commonwealth Bank of Australia
Unfortunately, like almost every other leading broker out there, Ord Minnett thinks that Commonwealth Bank shares are overvalued at current levels.
While the broker was pleased with its quarterly update last month, it didn't see enough to warrant a buy (or even a hold) rating.
Commenting on the quarter, the broker said:
Commonwealth Bank reported March-quarter cash earnings in line with market expectations, buoyed by revenue growth of 2% quarter-on-quarter(QoQ) after adjusting for fewer days in the period, versus headline growth of1% QoQ, and what the bank described as a "stable" net interest margin (NIM). […] The lender noted its hedging portfolios were particularly sensitive to three and five-year swap rates, however, and these had declined "materially in recent months". This could squeeze its NIM in FY26 and FY27 if official interest rates were to be cut deeper and faster than currently expected by the market.
The balance sheet remains rock-solid, while asset quality deteriorated, as it has at the other big banks. Another operationally sound performance from the business does nothing to change Ord Minnett's negative view on the stock, however, as the bank's fundamentals bear no relation to the extreme valuation multiples of CBA shares. We thus reiterate our Sell recommendation on CBA.
Ord Minnett has a sell rating and $105.00 price target on its shares.
Macquarie Group
Macquarie released its full year results last month and delivered on expectations.
And while it sees both positives and negatives from the current environment for the investment bank, it has faith in the company's foresight in identifying global trends and overcoming tough trading conditions. It said:
Macquarie Group posted second-half FY25 earnings in line with market expectations, with the asset management arm and banking business being the standout performers. Despite recent global market upheaval, management had a positive view on the outlook in its divisional guidance, which Ord Minnett expects will convince the market to leave consensus FY26 estimates unchanged.
Macquarie is exposed, both positively and negatively, to the market environments, in which it operates, and this means company earnings guidance for the year ahead carries greater risks than might be the case for other businesses. That said, the company's foresight in identifying global trends, such as the digitisation of the economy, infrastructure expansion as urbanisation intensifies, and the energy transition, recent green energy setbacks notwithstanding, and its track record of shrewd investment decisions to profit off those trends, makes Macquarie an attractive investment option on a medium-term view.
In response, the broker has maintained its accumulate recommendation and price target of $210.00.
