Down 14% in a month, should I buy the dip on CBA shares?

A man in a suit smiles at the yellow piggy bank he holds in his hand.A man in a suit smiles at the yellow piggy bank he holds in his hand.

It’s a bit of an understatement to say that the S&P/ASX 200 Index (ASX: XJO) has had a bit of a rough month. Since mid-February, the ASX 200 has lost just under 4.7% of its value. Commonwealth Bank of Australia (ASX: CBA) shares haven’t been spared either. 

Yesterday, CBA recovered from a nasty morning plunge to finish the day slightly higher at $95.28 a share. That was despite the CBA share price falling as low as $93.05 soon after lunchtime.

But even so, since the beginning of February, CBA shares have lost close to 15%. Yes, a month ago, CBA was going for more than $111 a share. But yesterday, this leading ASX 200 bank closed at $95.28.

That leaves the CBA share price down by 5.7% year to date:

As what many investors on the ASX regard as a high-quality share, it’s not too often that we see pullbacks like this in the CBA share price.

As such, many investors might be wondering if this dramatic pullback over the past month has left the Commonwealth Bank share price in the buy zone today.

Are CBA shares a buy-the-dip opportunity right now?

Well, one ASX broker who reckons CBA shares could be in the buy zone after these recent falls is Morgans. As my Fool colleague James covered earlier this month, Morgan currently rates CBA as one of its best buy ideas. That’s despite the broker only having a hold rating on the bank right now.

Even so, Morgans gives the CBA share price a 12-month target of $96.11 per share – slightly above where CBA closed at yesterday.

Here’s some of what the broker said in its recommendation:

We view CBA as the highest quality bank and a core portfolio holding for the long term, but the trade-off is it is the most expensive on key valuation metrics (including the lowest dividend yield). Amongst the major banks, CBA has the highest return on equity, lowest cost of equity (reflecting asset and funding mix), and strongest technology.

As such, Morgans might be even more bullish on CBA shares after their recent descent.

The broker is also forecasting a fully franked, final dividend of $2.40 per share later this year, which would be a nice boost to investor returns too if Morgans is on the money here.

So that’s how one ASX broker views the Commonwealth Bank share price right now. Take that how you will.

The post Down 14% in a month, should I buy the dip on CBA shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Scott Phillips.

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