If you heard an odd thwacking noise this morning, that was the sound of analysts' jaws dropping to the floor as the Commonwealth Bank of Australia (ASX: CBA) share price once again hit new record highs.
That's right.
Despite analysts almost unanimously labelling CommBank shares as overvalued and forecasting a sharp correction, Australia's biggest bank is continuing to reward loyal shareholders today.
Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed Friday trading for $133.14. As we head into the Monday lunch hour, shares are swapping hands for $134.48 apiece, up more than 1%.
If the big four bank can hold onto these gains for the remainder of the trading day, this will mark a new all-time closing higher for the CBA share price.
It also sees shares in the big four banks' stock up more than 27% over the past 12 months, not including dividends.
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What have analysts been saying about the CBA share price?
Despite its market dominance, analysts have been labelling the CBA share price as anywhere from modestly overvalued to extremely overvalued for more than a year now.
That's in part due to their bearish outlook for bank stocks in general.
But it's more specifically related to the premium CommBank shares command over their peers.
At the current CBA share price, the stock is trading at a price-to-earnings (P/E) ratio of 23.5 times.
Here's how that stacks up with the other big four banks:
- Australia and New Zealand Banking Group Ltd (ASX: ANZ) trades on a P/E ratio of 13.0 times
- National Australia Bank Ltd (ASX: NAB) trades on a P/E ratio of 17.4 times
- Westpac Banking Corp (ASX: WBC) trades on a P/E ratio of 16.1 times
The list of brokers, analysts and fund managers with sell ratings on CBA stock is a long one.
Indeed, as Motley Fool analyst Zach Bristow recently pointed out, "CLSA's Ed Henning is the only investment bank broker who does not recommend that clients sell CBA shares."
Henning believes only a big economic turndown could stop the bank's strong performance.
As for the bearish analysts whose jaws you may have heard hitting their desks earlier, they include the team at Bell Potter and L1 Capital.
And Barrenjoey analysts said they "haven't seen a case where a stock has traded so far from its fundamentals, its peers, both domestically and internationally, and its own history" that the stock hasn't then fallen sharply.
Perhaps the most bearish of take came from E&P Financial Group banking analyst Azib Khan. Khan is advising investors sell CommBank stock, with a target for the CBA share price of just $80.
That implies a downside of more than 40% from current levels.
But, as mentioned up top, most of these same analysts have been making the same bearish call on CBA stock for well over a year now. And the big four bank has, so far, defied all forecasts of a sharp retrace.
