Broker forecasts CBA share price to slide 15%

Monday is shaping up to be a strong session for S&P/ASX 200 Index (ASX: XJO) banks, with giant Commonwealth Bank of Australia (ASX: CBA) among the gainers.

The sector’s strong performance follows on from a similarly favourable Friday for Wall Street banks, driven by quarterly earnings from the United States’ ‘big four’.

However, the future could be less convincing for the Aussie institution, with one broker tipping CBA’s stock to tumble close to 15%.

Right now, the CBA share price is $107.36. That’s 0.81% higher than its previous close.

For comparison, the ASX 200 is up 0.66% right now while the S&P/ASX 200 Financial Index (ASX: XFJ) has gained 0.79%.

Let’s take a closer look at what’s going on with the banking giant today.

CBA share price gains despite bearish broker

The CBA share price is in the green on Monday after stock in the United States’ ‘big four banks’ surged amid their quarterly earnings on Friday.

Shares in JPMorgan Chase & Co (NYSE: JPM), Bank of America Corp (NYSE: BAC), Wells Fargo & Co (NYSE: WFC), and Citigroup Inc (NYSE: C) gained between 1.7% to 3.3% in the final session of last week.

But, unfortunately, it’s not all good news for ASX 200 banks today. The largest of the lot has reportedly been hit with a broker downgrade.

Jefferies has cut its outlook for CBA shares, slapping the stock with a $91.30 price target – a potential 14.8% downside, The Australian reports.

It comes after many of the New York-listed majors alluded to an upcoming recession in their latest earnings, putting aside extra cash to cushion the impact of a potential economic slowdown.

JPMorgan and Bank of America‘s earnings led the pack on Friday. The pair’s quarterly profits lifted 6% and 1.4% respectively year-on-year to US$11 billion and US$7.1 billion.

Meanwhile, Wells Fargo’s quarterly profit fell 50% to US$2.86 billion and that of Citigroup slumped 21% to US$2.5 billion.

Back home, the CBA share price is far from alone in the green on Monday. Here’s how the remaining Aussie big four banks are performing in late morning trade:

• Shares in National Australia Bank Ltd (ASX: NAB) are up 0.96% at $31.60
• The Westpac Banking Corp (ASX: WBC) share price is gaining 0.84% to reach $23.96
• ANZ Group Holdings Ltd (ASX: ANZ) stock is up 1.31%, trading at $24.81

The post Broker forecasts CBA share price to slide 15% appeared first on The Motley Fool Australia.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bank of America, JPMorgan Chase, and Jefferies Financial Group. The Motley Fool Australia has recommended Westpac Banking. 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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