Buy, hold, sell: CBA, REA Group, and Xero shares

If you are wondering which ASX shares to buy, hold, or sell, then read on!

That’s because Morgans has given its verdict on the three popular shares named below.

Here’s what it is saying about them:

Commonwealth Bank of Australia (ASX: CBA)

Morgans thinks that banking giant Commonwealth Bank of Australia is overvalued at current levels. It has put a sell rating on CBA shares with a $96.07 price target.

The broker feels that there a risk of poor future investment returns due to its current valuation. In response to its recent quarterly update, Morgans said:

The market’s response to a mild earnings miss for a stock priced for perpetual perfection was today’s sharp share price decline. WBC seemed to be a beneficiary. We’ve downgraded FY26-28F EPS and DPS by c.3%. Lower earnings also reduces terminal ROTE and sustainable growth in our DCF valuation. DCF-based target price declines to $96.07/sh. We remain SELL rated on CBA, recommending clients aggressively reduce overweight positions given the risk of poor future investment returns arising from the even-now overvalued share price and low-to-mid single digit EPS/DPS growth outlook.

REA Group Ltd (ASX: REA)

Another ASX 200 share that Morgans has been running the rule over is realestate.com.au operator REA Group.

It was pleased with its solid performance during the first quarter of FY 2026, highlighting yet another strong yield outcome.

However, it isn’t enough for a buy rating. Morgans has put an accumulate rating and $247.00 price target on its shares. It said:

REA’s 1Q26 trading update benefited from a strong yield outcome (+13%), which helped to offset a softer new listings environment in the period (volumes down -8% vs the pcp). Group revenue was A$429m (+4% on pcp), with EBITDA (ex assoc.) up 5% on pcp to A$254m. We make minor changes (-1%) to our FY26-FY28 EPS estimates. Our DCF-derived price target is lowered to A$247 (from A$254). Given REA is trading on ~42x FY26F PE (MorgansE), broadly in line with its 10-year historical average, and now with >10% TSR upside to our valuation we upgrade REA to ACCUMULATE.

Xero Ltd (ASX: XRO)

Finally, this cloud accounting platform provider has also been given an accumulate rating by Morgans with a $141.00 price target.

While its first half performance was in line with expectations, it has trimmed its estimates to reflect the acquisition of Melio. Morgans said:

XRO’s 1H26 result was largely in line with expectations but higher investment expenses in the 2H and the inclusion of Melio into our forecasts lowers our EBITDA and FCF forecasts. Our prior XRO research presented our first take on XRO including Melio numbers and now, following its 1H26 result and greater clarity on costs, we reduce our short-term forecasts and formally publish our combined XRO and Melio forecasts. Our target price reduces ~30% to $141 on lower peer multiples and lower FCF per share. We retain our Accumulate recommendation, noting it may take some time for management to build investor confidence in the value add of Melio and return XRO back to rule of 40 growth.

The post Buy, hold, sell: CBA, REA Group, and Xero shares appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in REA Group and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.