Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - Goldman Sachs has initiated coverage on Commonwealth Bank of Australia (ASX:CBA) (OTC:CMWAY), a $185 billion market cap banking giant, with a Sell rating and a price target of AUD130.18. The stock has delivered impressive returns, up over 20% year-to-date, while maintaining a 3% dividend yield.
The investment bank believes the historic rally in CBA’s share price over the last 18-24 months, which was driven entirely by PE expansion to a current 28x, appears stretched on most metrics and was substantially influenced by sector rotation. InvestingPro analysis supports this view, with Fair Value calculations suggesting the stock is currently overvalued. Get access to 8 more exclusive ProTips and detailed valuation metrics with InvestingPro.
Goldman Sachs suggests that CBA’s current PE premium compared to its Major Bank peers, global developed market banks, and most other domestic names is unlikely to be sustained, with the end of June 2025 potentially marking the "high water mark" of this rally.
The firm notes investors are now "noticeably switching" into better share price performing Material and Industrial names, moving away from the ASX’s earnings underperformers.
Looking forward, Goldman Sachs expects CBA’s earnings profile to remain "broadly flat" as interest rates are cut and credit growth slows, positioning their forecast 1-4% below consensus estimates.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.