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Commonwealth Bank of Australia (ASX: CBA) continues its meteoric rise, hitting yet another all-time high of AU$128.68 within the first half-hour of trading on Tuesday. As of 3:14 PM AEST, CBA share price was AU$127.99 apiece, 0.94% higher than previous day close. This surge brings CBA within striking distance of becoming the ASX 200's most valuable stock, trailing only BHP Group Ltd (ASX: BHP) by a mere AU$1 billion in market capitalisation.
Record Highs Amidst Analyst Caution
Despite concerns from many analysts about CBA's valuation, the stock shows no signs of slowing down. CBA shares are now among the most expensive bank stocks globally, prompting mixed opinions from market experts regarding the sustainability of its rally.
Expert Insights and Recommendations
Of the 17 analysts covering CBA, opinions are divided. Seven analysts recommend selling the stock, one suggests a moderate sell, six advise holding, and three lean towards a moderate buy. Goldman Sachs, one of the most bearish on CBA, cites the stock's "uncharted valuation territory" relative to its return on equity forecasts and maintains a sell rating with a target price of AU$82.61, predicting a significant 36% decline from current levels.
Braden Gardiner from Tradethestructure holds a more neutral stance, rating CBA as a hold and emphasizing its performance relative to the broader S&P/ASX 200 Index.
Market Performance and Strategic Considerations
CBA has delivered impressive returns this year, up by 12.4% year-to-date, outperforming the S&P/ASX 200's 2.15% gain. However, UBS anticipates a price correction, setting a 12-month target of AU$105, implying an 18% drop from current levels. Meanwhile, Philip King of Regal Funds Management has taken a short position on CBA, betting on a decline due to anticipated stagnation in earnings per share growth.
Short Interest and Market Dynamics
Despite King's pessimistic outlook, short interest in CBA remains relatively low at 1.56% of total shares outstanding, down from 1.66% six months ago. This suggests that while some investors are cautious, not all share the expectation of a significant price reversal amidst CBA's ongoing ascent.
Race to the Top Spot
CBA's market capitalisation reached AU$215.36 billion at its recent peak, inching closer to BHP's AU$216.55 billion. As CBA vies to become the ASX 200's largest constituent by market value, its trajectory will be closely watched amid a broader resurgence in bank stocks. Apart from CBA, all ASX 200 bank shares, except Bank of Queensland Ltd (ASX: BOQ), have also achieved new multi-year highs in 2024.
