Commonwealth Bank of Australia (ASX: CBA) shares are up 0.5% to $173.09 on Friday.
Australia's largest ASX 200 bank share had a tough finish to FY26.
In May, CBA released its 3Q FY26 update on the day after the Federal Budget.
The budget included proposed changes to negative gearing and capital gains tax (CGT) arrangements for property and other investments.
CBA shares got hammered, experiencing their largest one-day fall ever, and dropping to No. 2 in the S&P/ASX 200 Index (ASX: XJO).
Investors were concerned by the numbers in the report, and also the potential impact of tax changes on the property market.
CBA reported an unaudited cash net profit after tax (NPAT) of $2.7 billion, down 1% on its quarterly average for 1H FY26.
Net interest income rose 1% due to lending and deposit volume growth and other factors.
CBA increased the forward-looking component of collective provisions by $200 million to reflect higher macroeconomic risks.
For 3Q FY26, CBA's loan impairment cost was $316 million.
As Australia's biggest residential lender, CBA is arguably the most exposed to a possible housing market downturn.
After the Budget, Morgan Stanley issued a note tipping FY27 earnings downgrades for bank stocks due to expectations of softer mortgage growth and margin headwinds due to the proposed tax changes.
Those tax changes have now passed through parliament and will become effective on 1 July next year.
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What do the experts think about CBA shares
Five brokers have updated their ratings and 12-month price targets on CBA stock this month.
CBA is sell-rated across the board.
Here's an overview.
Morgans reiterated its sell rating and reduced its 12-month price target from $119.40 to $117.63.
This implies a potential 32% downside from here.
In a note last week, Morgans said:
Sell retained, given stretched valuation metrics remain implied in the share price (c.26x PER, 3.7x PBV, 2.9% cash yield).
Citi reiterated its sell rating on CBA shares with a 12-month price target of $135.
This implies a potential 22% downside from here.
Morgan Stanley maintained its sell rating on CBA shares with a 12-month price target of $125.
This implies a potential 27% downside from here.
Jefferies reaffirmed its sell rating and raised its 12-month price target from $142.26 to $144.40.
This implies a potential 16% downside from here.
Macquarie reiterated its sell rating on CBA shares with a 12-month price target of $111.
This implies a potential 35% downside from here.
CBA share price snapshot
CBA shares are down 0.2% over 12 months and up 75% over five years.
This compares to a 0.5% lift for the ASX 200 over 12 months, and an 18% increase over five years.
CBA shares hit a record high of $192 in June 2025.
