Commonwealth Bank of Australia (ASX: CBA) shares are trading in the green on Thursday lunchtime.
At the time of writing, the major bank's shares are up 0.75% to $154.82 a piece.
The rise is welcome news for investors, but there is a long way for the shares to go before they've recovered to levels seen just a week ago.
CBA shares spiked to $179.23 on Thursday last week before tumbling around 2%. The sell-off accelerated this week. By the close of the ASX on Tuesday, the shares had shed another 2.5%. Yesterday, the shares crashed by over 10%.
CBA shares have now fallen 16% over the past month, are down 4% year to date, and are over 7% lower than this time last year.
Now many are asking: Is the latest fall from grace an opportunity for buyers to get into the bank stock for cheap? Or is this the correction analysts have anticipated for some time now?
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What caused this week's sell-off?
The banking giant posted its third-quarter capital update ahead of the market open on Wednesday morning.
For the three months ended 31st March, the bank reported that its operating income was flat, with higher net interest income offset by lower other operating income.
The bank posted an unaudited cash NPAT of $2.7 billion, which is 1% lower than the quarterly average for the first half of FY26.
Elsewhere, its net interest income rose 1% due to lending and deposit volume growth and higher deposit margins. But this was partially offset by lending competition, a shorter quarter, and a lower New Zealand dollar.
The bank also announced that its loan impairment expense was $316 million for the quarter, and that it has raised the forward-looking component of collective provisions by $200 million to account for greater geopolitical and economic risks.
It looks like investors were spooked by the results. Many flocked to sell up their shares and take the latest gains off the table.
Have CBA shares now bottomed?
It's been the consensus for some time that CBA's shares are significantly overvalued relative to its peers. Analysts have also previously commented that the bank's bumper price tag isn't supported by its business fundamentals.
Today's data on Market Index shows that even after this week's crash, brokers still have a strong sell rating on the stock.
The brokers tip a potential downside of another 20% to an average 12-month target price of $123.90 at the time of writing. This is a decline from the average 12-month target price of $129.82 that brokers had on the stock last week.
TradingView data shows some analysts are even more pessimistic about the trajectory for CBA shares over the next 12 months. Out of 16 analysts, 14 have a sell or strong sell rating on the stock. Some think the shares could crash another 42% to as little as $90 each over the next 12 months.
If analyst predictions are anything to go by, it looks like CBA's share price could crash again.
