Commonwealth Bank of Australia (ASX: CBA) shares ripped to yet another all-time high within the first half hour of trading on Tuesday. CBA shares reached $128.68, up 1.48% on Friday's close of $126.80.
Despite many brokers declaring CBA shares overvalued, with the ASX 200 bank shares now among the most expensive bank stocks in the world, there seems to be no end in sight to CBA's rise.
Let's canvas some expert views on the situation.
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Is it too late to buy CBA shares?
Views are mixed but there is a leaning toward the sell side on CBA shares today.
Of the 17 analysts covering CBA on the bank's own trading platform, seven give the stock a strong sell rating. One gives it a moderate sell rating, six say it's a hold, and three say it's a moderate buy.
One of the most bearish on CBA is top broker Goldman Sachs.
The broker says CBA shares "are in uncharted valuation territory" based on the premium they usually trade at in relation to their return on equity (ROE) forecast.
Goldman has a sell rating on CBA. It expects the share price to fall to $82.61 within 12 months, a massive 36% decline from today's new record high.
The latest broker to weigh in on CBA shares is Braden Gardiner from Tradethestructure.
Gardiner rates CBA a hold and explains on The Bull:
Shares in Australia's biggest bank continue to perform – and beyond some people's expectations.
In my view, the outlook for the latest rally is linked to the performance of S&P/ASX 200.
Any tightening in CBA revenue growth could lead to selling pressure. Traders may want to consider locking in some gains if the share price falls below $116.
CBA shares are up 12.4% in the year to date, while the S&P/ASX 200 Index (ASX: XJO) is up 2.15%.
Another top broker, UBS, also expects the CBA share price to fall from here. This broker has a 12-month share price target of $105. This implies a fall of 18% from here.
Some experts are even shorting the stock!
Philip King, CIO at Regal Funds Management, is shorting CBA. That means he's put money on the price falling from here.
King says that historically, growth in earnings per share (EPS) has been a key driver of the CBA share price. However, over the past 10 years, he says the EPS growth rate has stalled.
He says CBA is "one of the most expensive banks in the world and could derate over the next 10 years if EPS falls as we expect it will."
According to the latest ASIC short position report, 1.56% of CBA stock is held short. This is an extremely small percentage.
It's also interesting to note that the short position was higher at 1.66% six months ago. Perhaps this implies that, given CBA's relentless rise, not as many brokers share King's expectations of a price drop.
Is CBA about to become the ASX 200's most valuable stock?
CBA shares may be on their way to overtaking BHP Group Ltd (ASX: BHP) as the ASX 200's biggest stock.
At the time of writing, BHP shares are trading at $42.70, up 0.64%. This gives the mining giant a market capitalisation of $216.55 billion. At today's record high, CBA had a market cap of $215.36 billion.
CBA is not the only bank stock riding high right now. All of the ASX 200 bank shares, bar Bank of Queensland Ltd (ASX: BOQ), have hit new multi-year highs in 2024.
Talk of interest rate cuts late last year set off an extraordinary run for ASX 200 bank shares, as shown here.
