Commonwealth Bank of Australia (ASX: CBA) shares are edging lower today.
Shares in the big four S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $160.48. At the time of writing, shares are changing hands for $160.33 apiece, down 0.1%.
Westpac Banking Corp (ASX: WBC) shares are heading the other way, up 1% at $35.04 each.
For some context, the ASX 200 is up 0.5% at this same time.
Taking a step back, CommBank stock has dropped 11.2% over the past 12 months, trailing the 0.7% one-year gains posted by the benchmark index. CBA shares also trade on a 3.1% fully-franked trailing dividend yield.
Westpac shares have managed to outperform the ASX 200 this past year, gaining 4.6% since 10 June 2025. Westpac shares also trade on a 4.4% fully-franked trailing dividend yield.
Looking ahead, however, Morgans' Damien Nguyen expects both ASX 200 bank stocks to likely underperform (courtesy of The Bull).
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Should I sell CBA shares today?
"CBA is Australia's highest quality retail bank, with a leading market position, strong digital platform and reliable earnings generation," Nguyen said.
"However, quality alone doesn't justify the recent valuation, which stands at a significant premium to domestic and global banking peers," he added.
Summarising his sell recommendation on CBA shares, Nguyen concluded:
Credit quality remains sound, but should be monitored in a higher-for-longer interest rate environment. The market has long rewarded CBA with a premium multiple. But at recent levels, the shares appear to price in a near perfect outcome with little room for disappointment.
Time to exit Westpac shares?
Atop his bearish outlook on CBA shares, Nguyen also issued a sell recommendation on Westpac shares.
"Revenue growth appears constrained by a competitive mortgage market and subdued business lending conditions," he noted.
Citing ongoing uncertainty, Nguyen noted:
The bank has made meaningful progress on its strategic simplification agenda, shedding non-core businesses and improving its risk and compliance foundations. The pathway to sustainable outperformance remains unclear.
In our view, the recent share price doesn't offer a sufficient margin of safety in a challenging banking environment. We see the risk–reward equation as unfavourable at recent levels.
Also bearish on Westpac shares
Westpac topped CBA shares on The Bull this week, with two analysts tipping the ASX 200 bank stock as a sell.
"Westpac has a strong retail franchise, but the valuation appears stretched," MPC Markets' Mark Gardner said. "Consensus targets imply downside from current levels."
According to Gardner:
The bank has made progress on simplifying its operations and cutting costs, but, in our view, earnings growth is still expected to lag the broader Australian market.
The bank is up against competitive pressures and the risk of softer credit conditions. Investors may want to consider taking a profit at these levels.
