UPDATE: Australian bank stocks have just suffered a significant downturn, with all major banks closing in the red yesterday. The Commonwealth Bank of Australia (ASX: CBA) plummeted by 2.95%, while National Australia Bank Ltd (ASX: NAB) fell 2.37%. Westpac Banking Corporation (ASX: WBC) is down 2.2%, and Australia and New Zealand Banking Group (ASX: ANZ) dropped 1.96%.
This decline is critical for investors, as the dominance of these banks in the Australian economy could impact portfolios significantly. Investors are urgently questioning whether any of these stocks are still worth buying heading into 2026.
In 2025, ANZ shares emerged as the top performer among the big four, rising by 24% year-over-year. Westpac also saw gains of nearly 17%, while NAB reported an increase of about 10%. CBA, however, is barely holding steady, showing little change since January 2025.
As we look ahead to 2026, experts are sounding alarm bells. Broker evaluations suggest that the upside for these stocks is extremely limited. Morgans has issued a sell rating on NAB, setting a price target of $31.46, signaling a potential 24% decline from its current value. Westpac’s average price target stands at $33.41, approximately 12% lower than current levels.
The situation for ANZ is similarly grim, with Morgans expressing disappointment in their second-half results. They have assigned a trim rating and a target price of $33.09, while CBA is expected to continue its downward trend, with price targets from Morgan Stanley at $144.80 and Jefferies at $143.87.
With the big four banks facing such a bleak outlook, attention is shifting to alternative investments. Judo Capital Holdings Ltd (ASX: JDO), a challenger bank specializing in small and medium enterprises (SMEs), is gaining traction. Despite a 5% drop over the past year, experts are optimistic. UBS has set a price target of $2.20 for Judo shares, indicating a potential upside of nearly 28%.
Investors are urged to reconsider their strategies regarding the big four banks as they navigate these turbulent waters. Before investing in Commonwealth Bank of Australia or any of its peers, it may be wise to explore other opportunities that could yield better returns.
As the situation develops, market watchers should keep a close eye on stock performances and expert analyses to make informed decisions. The implications of these trends could have lasting effects on the Australian banking sector and the broader economy.
For those looking for expert insights, Motley Fool’s investing expert Scott Phillips has identified five top stocks that may offer better investment opportunities right now, and Commonwealth Bank of Australia is notably absent from that list.
Stay tuned for further updates as this story unfolds.
