Commonwealth Bank of Australia (ASX:CBA) posted "clean and simple" fiscal-first half results, with strong deposit growth and effective balance sheet management, according to a Wednesday note by Jarden Research.

The bank reported Wednesday that its cash earnings per diluted share in the fiscal first half rose to AU$3.065 from AU$2.967 per diluted share a year earlier.

Total net operating income for the six months to Dec. 31, 2024, was AU$14.1 billion, up 4% from AU$13.58 billion in the same period last year, the Bank said.

Despite these positives, Jarden raised concerns about CBA's elevated valuation, pointing out the bank's price-to-earnings ratio of around 27 times and price-to-book ratio of 3.6 times, given its modest growth outlook.

While banks often benefit from rate cuts due to volume growth and improved credit, Jarden noted this cycle is different. With low bad debts and healthy volumes, potential rate cuts may prompt a sector rotation away from banks.

Jarden cautioned that the bank's current market price appeared driven by "narrative and flow" rather than fundamentals.

The investment firm downgraded CBA's rating to sell from underweight and lowered its price target to AU$110 from AU$113, citing a limited margin of safety.