Valuations can come down one of two ways – a lower share pri...

Valuations can come down one of two ways – a lower share price or higher earnings. But Citi says, "it is very difficult to construct an earnings scenario which justifies the run in the shares."
The latest financial models from Goldman Sachs expect CBA's earnings per share to fall 2.1% in FY24 and another 4.9% in FY25, before rising 27% in FY26. If analysts anticipate no earnings growth over the next three years, how do we justify the current rally and how can it keep going?
At market bottoms, price usually leads earnings by 2-3 quarters, sometimes even longer. We might be at the point in the cycle where valuations run and earnings take the back seat. But we're still missing a few key ingredients, including interest rate cuts and improved liquidity conditions.
But maybe this is what the share price is trying to tell us – that there are better days ahead. And when they come, the analysts will be quick to tweak their models for more growth. Or maybe CBA is just one of the most ignorant stocks out there. $CommBank(CBA.AU)$