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Commonwealth Bank of Australia (ASX: CBA) witnessed a notable uptick on Friday, with its shares surging by up to 0.66% to AU$117.86 apiece, reflecting positive sentiments among investors following the release of its third-quarter results.
According to analysts at Jarden, the bank's Q3 performance indicates a moderation in margin pressures coupled with benign credit levels, offering a reassuring outlook for the financial institution.
Australia's largest lender reported a decline in profit for the January-March period, attributing it to intensified competition eroding the benefits of a resurgence in its mortgage book. Additionally, CBA highlighted that inflationary pressures were contributing to a rise in delinquencies among borrowers.
In response to the Q3 results, Jarden brokerage revised its earnings estimates for CBA, boosting the forecasts for FY24 and FY25 by 0.4% and 0.5% respectively. The upward revision was primarily driven by expectations of margin improvements and a reduction in bad debts.
Despite the positive adjustments to earnings estimates, Jarden maintained an "underweight" rating on CBA stock, with a price target (PT) of AU$102. This cautious stance reflects lingering concerns and challenges faced by the bank amidst the evolving economic landscape.
Notably, data from LSEG indicates that the average rating of 15 analysts covering CBA is categorized as "sell," with a median PT of AU$92.95. This suggests a broader sentiment among analysts towards a more conservative outlook on the bank's performance in the foreseeable future.
Despite these reservations, CBA's stock has demonstrated resilience, posting a year-to-date increase of 4.7% as of the last close. This upward trajectory underscores the bank's robust position in the market despite prevailing challenges and uncertainties.
