Shares in Commonwealth Bank of Australia Ltd (ASX: CBA) had a bit of a shocker of a week, tumbling heavily after the bank released its third-quarter results.
Shareholders are now marginally in the red if they've held the shares for a year, while this week's falls should be kept in context – the shares have just given back all of the gains they made from about mid-February.
The key thing for shareholders, though, is where the shares will go from here, and if you're asking the analysts, the news isn't good.
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Results didn't impress
Firstly, let's have a look at what CBA announced on Wednesday.
The bank said it had generated cash net profit after tax of about $2.7 billion, down 1% on the quarterly average across the first half and up 4% on the previous corresponding quarter.
Operating income was flat, "with the benefit of lending and deposit volume growth offsetting the impact of two fewer days. Underlying net interest margin was broadly stable excluding non-recurring tailwinds''.
CBA said its loan impairment expense was $316 million, "with higher collective provisions reflecting heightened geopolitical and macroeconomic uncertainty''.
Analysts say there's further to fall
Having a look at what the analysts are saying, the team at Macquarie said the CBA results reflect a trend of revenues weakening across the sector.
They added:
CBA's 3Q26 trading update was a slight miss to consensus expectations, driven by weaker revenues and a provisioning top-up. Stepping back, our key takeaway from May results has been a clear deterioration of revenue trends across the sector, with quarter on quarter revenue falling 3%. While CBA has marginally outperformed peers, trends were still weaker, with underlying revenue ~flat. With downside risk to earnings and a more challenging macro backdrop, we maintain Underperform.
Macquarie has a price target of $114 on CBA shares.
The analysts at Morgans also believe CBA shares have further to fall, with a price target of $119.40 on the shares and a sell recommendation.
The Morgans team said:
As well as being Australia's largest bank, compared to its peers CBA has the highest return on equity, lowest cost of capital, leading technology, largest position in the residential mortgage market (with the lowest risk portfolio in this low risk market segment) and largest low cost deposit base (with a greater skew to households and transaction accounts than its peers), and a loyal retail investor and customer base. However, we believe potential medium-term returns are too compressed at current prices considering CBA's elevated trading multiples.
The team at UBS is not quite as downbeat at the prospect for CBA shares, with a price target of $130, still well south of where the shares are currently at.
And finally, Jarden has the lowest price target on the shares of $90.
The Jarden team notes that CBA has the most to lose from the changes to negative gearing in the Federal Budget announced during the week.
The Jarden team said:
CBA appears quite vulnerable to the negative gearing changes for investor home loans, a space it dominates where loans are typically interest only, wider spread and better asset quality underpinning a superior return on equity.
