ASX bank share Commonwealth Bank of Australia (ASX: CBA) has seen plenty of volatility in the past year, as the chart below shows.
I think this is a good time to ask whether Australia's largest bank is attractive or overvalued, considering it's down 8% from mid-April.
For such a large business, that's a significant reduction of the market capitalisation in dollar terms.
After everything that's happened, let's take a look and see if the ASX bank share is attractive according to experts.
Image source: Getty Images
Can the CBA share price rise from here?
The company has a long-term track record of delivering earnings growth, which is a great tailwind for share price gains.
Commonwealth Bank has managed to deliver good returns for investors through its connection with its customers. The bank has a high level of loans originating through proprietary channels, which helps its market share and net interest margin (NIM).
But being a high-performer may not necessarily help the CBA share price in the near-term, with headwinds like taxation changes and higher interest rates hurting potential loan demand.
Now let's consider what could happen with the ASX bank share. Analysts sometimes put a price target on a business, which is where analysts think the business could be trading within 12 months.
According to CMC Invest, there have been eight analyst ratings on the business in the last three months. All of those ratings were a sell.
The average price target for CBA shares is $120.69 of those eight analysts, suggesting the business could fall by close to 30% within the next year. In other words, experts still think the ASX bank share is significantly overvalued.
The most optimistic price target is $144.40, implying a possible 14% decline. The most negative price target is $90, implying a potential decline of around 47% from its level at the time of writing.
Commonwealth Bank valuation
According to the projection on CMC Invest, the CBA share price is valued at 26x FY26's estimated earnings.
The business is still forecast to grow earnings in both the 2027 financial years and 2028 financial year, but the pace of the earnings growth is expected to be slow.
In FY27, its net profit is only expected to rise by 5.4%. In FY28, the net profit is forecast to grow earnings by just 1.3%.
In terms of the dividend, the FY26 CBA grossed-up dividend yield could be 4.3%, including franking credits, at the time of writing.
I don't think Commonwealth Bank shares are the best place to invest new cash right now; other opportunities seem more appealing.
