Commonwealth Bank of Australia (ASX: CBA) shares are giving back some of yesterday’s gains.
In morning trade, Australia’s largest bank’s shares are down 1% to $103.83.
Why are CBA shares falling?
Investors may have been selling the bank’s shares today after analysts responded to its full-year results.
And while the general consensus was that CBA delivered a strong set of numbers, none of the major brokers have seen enough to recommend its shares as a buy.
In fact, the majority of brokers out there have held firm with sell ratings.
What is being said?
One of the most bearish brokers is Goldman Sachs. While it was pleased with CBA’s FY 2023 profit result, it has warned investors that the bank’s profits may not reach this level again until FY 2028.
In light of this, it doesn’t believe that its shares deserve to trade at such a premium to the rest of the big four banks. Its analysts explain:
Overall we reiterate our Sell rating, given: i) CBA’s consumer banking skew leaves its earnings more exposed to sector wide headwinds, including intense mortgage and deposit competition, and adverse impacts from households experiencing elevated interest burdens from higher interest rates, and ii) while CBA has historically done a good job in balancing investment and productivity, we do not think it can escape elevated FY24E cost pressures given heightened inflation.
Therefore, given we expect underlying PPOP to cumulatively fall by 6% over FY24/25E, and not recover to FY23 levels until FY28E, we struggle to justify the 58% 12-mo fwd PPOP premium it is currently trading on versus peers (ex-dividend adjusted), compared to the 28% historical 15-year average. Sell.
Goldman has a sell rating and a $81.63 price target on CBA’s shares. This implies a potential downside of 21% from current levels.
The broker continues to see more value in a couple of its rivals. These are ANZ Group Holdings Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB), which it recommends as buys ahead of CBA. Time will tell if the broker has made the right call on these big four banks.
