Commonwealth Bank of Australia (ASX: CBA) shares closed the day in the green again on Tuesday. When the bell rang at 4:00pm, the shares were 0.18% higher at $183.52 a piece.
The uptick means CBA shares have now climbed 9.5% in April alone.
They're also up 13.9% for the year-to-date and 16.7% higher than this time a year ago.
What's most surprising is that CBA shares have been considered overvalued for some time now. But they keep on climbing higher!
Analysts have widely commented that the bank's share price is overvalued relative to its peers, and that its bumper price tag isn't supported well by its business fundamentals.
CBA's price-to-earnings (P/E) ratio, at the time of writing, is 29.52, which is much higher (and therefore more expensive) than the other major big four Australian banks.
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Are the shares a buy, sell or hold?
Analysts are mostly bearish on the outlook for CBA shares, with consensus of a downturn ahead for its share price.
TradingView data shows that 14 out of 16 analysts have a sell or strong sell rating on the stock. The average target price is $129.98, which implies a 29.2% downside at the time of writing. But some think the share price could crash 50.7% to just $90 within the next 12 months.
The reality is, while CBA shares offer reliable passive income from a defensive stock with strong operational performance and potential for further growth, investors can also find this elsewhere at a lower price.
If that's the case, why are CBA shares still climbing higher?
It's a good question, and one which boils down to several different factors.
CBA is a defensive stock, which means it can remain stable in times of economic crisis. Because of this, it generally has strong and consistent operational performance and earnings, even when markets are mostly weak.
For example, the banking giant posted an unexpectedly-positive half-year FY26 result earlier this week. Its share price has been climbing ever since.
The bank is huge, dominant, and highly profitable, which means investors are struggling to see it as anything other than a safe haven during times of volatility. Scarcity of quality stocks on the ASX also means investors pile into the same dominant players, like CBA.
Not only that, but because of its defensive nature and strong momentum, it's able to pay a decent dividend to investors. It's another perk for investors.
CBA has paid dividends twice per year consistently since 2006. The bank last paid a fully franked dividend of $2.35 per share to investors in late-March.
While a stock might be considered overvalued based on rational pricing and business fundamentals, share prices also run off investor sentiment and demand. So, while CBA continues to look attractive to investors, its share price could keep climbing as more and more buy into the ASX bank stock.
