ASX-listed companies Commonwealth Bank of Australia (CommBank) (AU:CBA) and National Australia Bank Limited (AU:NAB) have today received Sell ratings from a Morgan Stanley analyst.
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Morgan Stanley has indicated that the banking sector is expected to underperform the ASX 200 in 2023. This projection is based on a combination of factors, including an economic slowdown, continued interest rate hikes, and declining house prices. The broker also added that there is a possibility of higher dividends in the coming years, which would enhance the cash returns for shareholders.
Let’s examine them in more detail.
CBA Stock Price Prediction
CommBank is a leading Australian retail bank with global operations. Even though analysts are not bullish on the bank’s share price growth, its dividend story is still promising at a dividend yield of 4.35%.
Today, analyst Richard Wiles from Morgan Stanley confirmed his Sell rating on the stock, suggesting a downside of 15% in the share price. Wiles believes the bank’s margins are volatile and are expected to fall in 2024.
According to TipRanks’ analyst consensus, CBA stock has a Moderate Sell rating based on seven Sell and four Hold recommendations. The average price target is AU$90.23, which is 6% lower than the current price level.
Are NAB Shares a Good Investment?
NAB is among the four largest banks in Australia, serving a customer base of over eight and a half million. NAB carries a dividend yield of 6.43%, higher than the industry average of 2.114%.
Today, Wiles reiterated his Sell rating on NAB also at a price target of AU$25.3. This is almost similar to the current trading level and offers no significant upside.
Overall, NAB stock has a Hold rating on TipRanks backed by four Buy, two Hold, and four Sell recommendations. The average price forecast is AU$27.53, which is 9% higher than the current share price.
Conclusion
Despite establishing a strong foothold in the Australian market, analysts are currently bearish on these stocks considering the tougher economic conditions. In general, NAB has a Hold rating, while CBA is assigned a Moderate Sell rating by analysts.
On the plus side, these stock offers healthy dividends, making them an ideal choice for income investors.
