The last month has brought turmoil to the international banking sphere, ultimately dredging up concerns about the ASX's own financial sector. Amid the carnage, the Commonwealth Bank of Australia (ASX: CBA) share price has plunged 11% from its February high. But has the tumble produced a major buying opportunity?
So much has happened among international banks over the last 30 days. But the chaos had been building for some time prior.
Many central banks began hiking rates in response to rampant inflation in 2022. This, in turn, dropped the price of bonds, leaving some international US and European banks facing liquidity challenges.
The first casualty came with the collapse of the US Silvergate Bank. Days later, a bank run saw Silicon Valley Bank suffer the same fate, with Signature Bank closed by regulators soon after.
Meanwhile, over the pond, Swiss giant Credit Suisse was on the brink of collapse when peer UBS stepped in to acquire it.
Understandably, all this appeared to wobble investor sentiment for S&P/ASX 200 Index (ASX: XJO) bank shares – the S&P/ASX 200 Financial Index (ASX: XFJ) tumbled 5.1% last month. And CBA wasn't shielded from the downturn.
The CBA share price is trading at $99.17 right now. Should investors be taking advantage of its recent share price weakness? Let's take a look.
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Is the CBA share price cheap right now?
If all the disruption has shaken your confidence in ASX 200 bank shares, you might find comfort in Goldman Sachs' recent findings.
The top broker ran its ruler over the sector last month, finding Aussie financial institutions have solid liquidity coverage and strong capital positions, as my Fool colleague James reports. Additionally, CBA might be the safest of its kind to be invested in, judging from a few key measures.
And while its valuation is higher than that of its big four peers, UBS doesn't appear too concerned.
The broker recently downgraded its outlook for many ASX 200 bank shares, dropping its price target for CBA shares by just 1% to $100 with a neutral rating – a potential 1% upside. Meanwhile, Morgans has a hold rating and a $96.11 price target on the biggest big four bank stock – marking a predicted 3% downside.
Fairmont Equities founder and managing director Michael Gable also rates the stock as a (seemingly optimistic) hold, telling The Bull:
Although CBA is the most expensive bank, we believe the price premium is justified because of its quality. Over the longer term, it outperforms the other major banks.
My Foolish takeaway
So, all that considered, I don't think the CBA share price's current level represents a massive, once-in-a-decade opportunity. Though, the stock could still be a safe place for wary investors to park their cash or, potentially, a rewarding long-term investment.
It's also worth noting that there's still potential for more international bank crashes.
I'll be watching the ASX 200 bank sector closely over the coming weeks and months in case another tumble brings about a more solid buying opportunity.
