Commonwealth Bank of Australia (ASX: CBA) and Xero Ltd (ASX: XRO) shares have been attracting plenty of attention following their latest updates.
But could now be a good time to buy? Here's what one leading broker thinks and my own personal opinion.
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CBA shares
It is fair to say that CBA shares have been an outstanding investment over the years. They have continued to defy the bears and deliver big returns for investors.
However, at the risk of sounding like a broken record, I'm not convinced they offer good value at current levels.
And it seems that analysts at Morgans share this view following the banking giant's first-quarter trading update.
The broker was disappointed with the result, noting that earnings were flat compared with the second-half FY 2026 quarterly average and that growth was tracking below expectations. It said:
Markets revenue weakness and higher credit losses were the key headwinds.
In response, Morgans has downgraded its earnings forecasts for FY 2027 through to FY 2029 by as much as 5% and reduced its price target slightly to $119.27.
The broker has also retained its sell rating, highlighting the potential for a negative total shareholder return of approximately 26%. It concluded:
Valuation remains stretched given the growth outlook and required risk-adjusted returns.
I agree with this view. CBA is undoubtedly a high-quality company with a strong competitive position, loyal customers, and an impressive track record.
However, its premium valuation is difficult to justify when earnings growth is relatively subdued and credit costs are increasing.
For existing shareholders, I think there is an argument for holding onto a quality company for the long term. But at current prices, I would be reluctant to add to a position and believe there are better opportunities elsewhere.
Xero shares
One of those opportunities could be cloud accounting platform provider Xero.
Its shares have fallen almost 40% over the past 12 months, but its latest half-year results suggest the underlying business continues to make progress.
Morgans was encouraged by the result, which was broadly in line with expectations and accompanied by a small upgrade to FY 2027 guidance.
Importantly, management now expects to achieve its Rule of 40 target in FY 2027, a year earlier than previously anticipated.
The broker also highlighted improving momentum in the US, including the performance of its Melio payments business, and greater clarity around Xero's opportunities in artificial intelligence.
And with management announcing a new $1 billion on-market share buyback, there are reasons to be optimistic.
Morgans believes these developments "should be well received by investors."
As a result, the broker has lifted its price target to $90.00 and retained its accumulate rating. This implies potential upside of 17% over the next 12 months.
I agree with the positive outlook and would be a buyer of Xero shares at current levels.
The company has a significant opportunity to expand its global customer base, increase revenue from existing customers, and improve profitability as it scales.
While its US expansion and investment in Melio carry risks, I believe this year's share price weakness has created an attractive entry point for patient investors.
