Morgan Stanley believes Commonwealth Bank is priced for a strong result so the potential for disappointment is great. The outlook for margins and costs, alongside expectations of a buyback, will be the main focus.
The broker forecasts a cash profit of $4.46bn, broadly in line with consensus.
With the sale of asset management completed and a revised transaction path in place for the sale of CommInsure Life, Morgan Stanley forecasts a $2bn off-market buyback and believes investors will be disappointed if capital management is delayed again.
Underweight maintained. Target is $70. Industry view: In-Line.
Target price is $70.00.Current Price is $84.05. Difference: ($14.05) – (brackets indicate current price is over target). If CBA meets the Morgan Stanley target it will return approximately -20% (excluding dividends, fees and charges – negative figures indicate an expected loss).