Is the CBA share price in the buy zone?
The post Brokers give their verdict on the CBA (ASX:CBA) share price appeared first on The Motley Fool Australia. –
The Commonwealth Bank of Australia (ASX: CBA) share price has run out of steam and is trading lower on Thursday.
In afternoon trade, the banking giant’s shares are down 2.5% to $105.43.
Why is the CBA share price under pressure?
The weakness in the CBA share price on Thursday is likely to have been driven by the release of a couple of bearish broker notes this morning.
In response to the bank’s full year results, both Citi and Credit Suisse downgraded the company’s shares to the equivalent of sell ratings.
Citi has downgraded CBA’s shares to a sell rating and cut the price target on them to $94.50. Whereas Credit Suisse has downgraded its shares to an underperform rating with a $95.00 price target.
Both brokers have reduced their near term earnings estimates to reflect higher costs.
Is anyone bullish?
One leading broker that remains positive is Bell Potter. This morning the broker upgraded the bank’s shares to a buy rating with an improved price target of $118.00.
Based on the current CBA share price, this implies potential upside of 12% over the next 12 months.
Bell Potter commented: “The main changes to our cash NPAT (continuing) projections relate to higher noninterest income (mainly higher card fees, fee waivers and removal of wealth contributions) as well as a still lower LIE charge in FY22 and beyond.”
“Given these, cash NPAT is now 2% higher in FY22, FY23 and FY24. We have also matched the statutory and cash dividend payout ratios as follows: FY22 75%; FY23 75%; and FY24 75%. As a result, we have increased the valuation and price target by $13.00 to $118.00 per share and this includes adding the value impact of higher excess CET1 capital. CBA’s target share price has done well in the past three months and up by more than 25% in absolute terms. The rating is now back to a Buy,” it added.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.