The Commonwealth Bank of Australia Ltd (ASX: CBA) share price fell off the cliff-face last week, losing 9.5% across the five days. That comes despite it edging 0.36% higher on Friday to end the week at $97.81.
Shares in the banking giant tanked from a closing high of $107.68 on Tuesday to finish as low as $98.99 on Wednesday after the company released its quarterly trading update.
In light of this, several leading investment firms have weighed in on the investment debate for CBA shares. Here's what the experts from each broker had to say.
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Is the CBA share price a buy?
Analysts at Goldman Sachs don't reckon so. The firm is heavily bearish and cut its price target by another 3% to $81.74 in a recent update.
Goldman notes that CBA isn't immune to losing market share in its mortgage business, as competition mounts up from other Aussie banks in the space.
It says "while CBA's commitment to investment is the right thing for the franchise in the medium term, it provides it with less flexibility to offset the revenue headwinds".
The team at Macquarie Group Ltd (ASX: MQG) doesn't think CBA is a buy right now either. The investment bank likens Commonwealth's increased spending and worsening margins to that of Westpac's, which doesn't bode well.
It also notes mortgage competition and record low interest rates hurt CBA's margins further. It expects CBA to deliver a deficit of 3% in pre-provision earnings growth in FY22.
Macquarie thinks the CBA share price could fall by up to 15% to $87.50 and maintains an underperform rating.
Morgan Stanley agrees with its colleagues and slaps an $87.50 price target as well while staying underweight on the company.
It states that investors should reassess CBA's position within the market, and its ability to maintain above-average growth.
The firm also believes CBA won't be able to restore its dividend to its FY19 glory for at least another 2–3 years. Further, it notes CBA's buyback program is only likely to dilute the share count by around 1%, subsequently questioning its value.
What other ratings are there?
Ord Minnett also jumped into the debate and anticipates further earnings estimate downgrades following CBA's trading update.
It noted Commonwealth's revenue was 1% down from its quarterly average over the last 6 months and that it delivered worst-than-expected results.
Ord also has an underperform rating and believes further challenges will result in downgrades to margins, lower non-interest income, and higher costs to growing the business.
Adding to the sell list is Citi, with a sell rating and $94.50 valuation on the CBA share price.
Citi notes CBA's result was 3% lower than its internal estimates, and that CBA's net interest margin (NIM) faced pressure.
This makes its premium to peers hard to justify, according to Citi. It said, "trading at 2.4x book value and having strongly outperformed peers over the last month, we see little to justify the premium in this result".
What's the overall sentiment on the CBA share price?
Out of the 16 analysts covering the CBA, 11 have a sell rating or are bearish on the direction of its share price. Three firms, Jefferies, Bell Potter, and Jarden Securities, have buy ratings on the share and reckon it could be worth the purchase.
Each of these firms values CBA shares at $112, $111, and $101 per share respectively.
The spread between the highest and lowest valuation in the group is $39/share or 53%, with Morgans taking out the bottom spot with its reduced rating and $73 price target.
On average, the group values the CBA share price at $93.05, implying a downside potential of almost 5% on Friday's closing price.
