Commonwealth Bank of Australia (ASX: CBA) shares closed 0.56% higher on Monday afternoon, at $154.08 a piece.
For 2026 so far, the banking giant's shares have fallen 4.25% and they're now 13.79% below where they were just six months ago. Year-on-year CBA shares are 0.86% higher.
In 2025, CBA shares enjoyed a fantastic rally, peaking at an all-time high of $192.00 per share in June. But some analysts are warning that the banking giant's stock price could see a heavy downside in the year ahead, potentially even below $100 per share.
Here's why.
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1. CBA's shares are overvalued versus its peers
CBA's shares are significantly higher than other major Australian banks, and some analysts argue that the share price isn't supported by the bank's earnings and fundamentals.
CBA is currently trading on a price to earnings (P/E) ratio of 26.68, while other major Australian banks trade on much lower P/E ratios. For example, Westpac trades on a P/E of around 19.64, NAB's P/E ratio is around 19.20 and ANZ's P/E ratio is about 18.67.
This means investors are paying significantly more for CBA's earnings than they are for its big 4 bank peers.
CBA's premium reflects its strong market share, solid profits, and long track record of consistent performance. But, if earnings growth disappoints or investor confidence softens, there's a risk that its high valuation will work against the share price.
2. Net interest margins are under pressure
CBA faces ongoing pressure on its net interest margin (NIM) thanks to intense market competition and regulatory changes.
Intense competition in both home lending and deposit products is key driver of NIM pressure. In order to remain competitive, and attract and retain its customers, CBA and other major Australian banks have offered competitive pricing. But the downside is this pricing has compressed its margins. For FY25, the bank reported a NIM of 2.08%.
This NIM pressure is a key concern for investors and analysts because margin compression tends to slow earnings growth, which in turn can push CBA's valuation sharply lower.
3. Potential interest rate hikes
Late last year the Reserve Bank governor Michelle Bullock said that she didn't see a rate cut "on the horizon for the foreseeable future" and signalled that the board might consider an extended hold period or even a rate hike in 2026.
The cash rate currently sits at 3.6%, where it has been since the RBA delivered its last rate cut in August 2025.
While in the short term, an interest rate hike would be more earnings for banks like CBA, in the medium and long term it can lead to stronger competition and even an increase in mortgage stress. As CBA is heavily exposed to mortgage lending this can put huge pressure on its share price.
CBA shares could crash below $100
TradingView data shows that 13 out of 15 analysts have a sell or strong sell rating on CBA shares. The average 12-month target price is $124.37 a piece, which implies a 19.29% drop at the time of writing.
But some analysts think CBA's share price will plummet even more sharply down to $99.81 per share. That suggests a significant 35.22% drop over the next 12 months.
While it's clear that analysts expect a strong downside ahead for CBA shares in 2026, a drop below $100 would most likely be a worst-case scenario. That's unless sentiment completely shifts or we see signs of an economic downturn in Australia, both of which are very possible this year.
