Investment strategies regarding three prominent Australian companies—CSL Ltd, Commonwealth Bank of Australia (CBA), and Rio Tinto Ltd—have been assessed by the financial services firm Morgans. The firm categorizes these stocks as either buys, holds, or sells, reflecting their current valuations and market conditions.
CSL Ltd: A Buy Opportunity
According to Morgans, shares of CSL Ltd (ASX: CSL) are currently positioned as a buy. The brokerage believes that the biotechnology giant’s shares are undervalued, presenting a significant opportunity for investors. Morgans has set a target price of $249.51 for CSL shares.
Despite the company’s operations generally “tracking to plan,” guidance for the full fiscal year 2026 (FY26) has seen some adjustments. The firm downgraded revenue and Net Profit After Tax (NPATA) forecasts by approximately 2-3% due to ongoing declines in US influenza vaccination rates. Additionally, the Chinese government’s cost-control measures impacting albumin demand were also noted. While management has indicated confidence in mitigating these challenges within the first half of FY26, uncertainties in the US vaccination market have tempered growth expectations for FY27-28.
Morgans remarked, “We believe the risk of a permanently lower base is being over-priced,” suggesting that the current market valuations for CSL’s divisions, including Seqirus and Vifor, do not reflect their long-term potential.
Commonwealth Bank of Australia: Sell Recommendation
In contrast, Morgans has issued a sell rating on shares of Commonwealth Bank of Australia (ASX: CBA), citing concerns over their current valuation. The brokerage has set a price target of $96.07, indicating that shares may be overvalued and could face significant declines from present levels.
The firm highlighted that the market’s reaction to a slight earnings miss for a company typically priced for consistent perfection led to a sharp drop in share price. Morgans has revised its earnings per share (EPS) and dividend per share (DPS) forecasts for FY26-28 by around 3%. The brokerage expressed worries that the prevailing high valuation, coupled with the potential for disappointing future returns, necessitates a reduction in client holdings of CBA.
Morgans stated, “We remain SELL rated on CBA, recommending clients aggressively reduce overweight positions given the risk of poor future investment returns arising from the even-now overvalued share price.”
Rio Tinto Ltd: Cautious Optimism
Morgans maintains a cautious stance on Rio Tinto Ltd (ASX: RIO), advising a trim rating with a target price of $140.00. While the firm acknowledged the mining company’s strong finish to the financial year 2025, it anticipates challenges in sustaining this performance into the first quarter of FY26.
The brokerage noted that record production and shipments in the fourth quarter have positioned Rio Tinto at the low end of its guidance for calendar year 2025. Improvements in copper production, particularly from operations in Escondida and Oyu Tolgoi, contributed positively, alongside the successful first shipment from Simandou. However, Morgans cautioned that the strong results may be difficult to replicate, as shipments are expected to normalize and copper grades are projected to decline.
Morgans affirmed, “Valuation remains stretched at current levels,” and has opted to retain its trim rating with the price target unchanged.
Investors looking to adjust their portfolios may find guidance from Morgans on these major ASX players useful. With CSL presenting a potential buy opportunity, CBA flagged as a sell, and Rio Tinto taking a cautious approach, the market dynamics for these companies continue to evolve.
