Why the CBA share price continues to defy gravity

The combined hours of lost sleep and career scorn that stockbroker banking analysts have suffered over the past six months thanks to the Commonwealth Bank’s gravity-defying share price gains is immeasurable.

Even CBA itself hasn’t picked up any stock in its own share buyback in recent months – presumably because it concurs with analysts that its share price has moved into nosebleed territory. Like the pack, Johnson understands that, based on fundamentals, CBA’s share price punches well above its weight. He has a target price of $102.53 after applying a 50 per cent premium to the $70 fundamental valuation.

Johnson provides the example of a retail investor who bought 400 shares in the CBA float in 1991 for $2160 and reinvested the dividends – they would be sitting on shares worth more than $270,000. And those who didn’t reinvest in dividends would have earned a fully franked dividend yield.

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