The HSBC (LSE:HSBA) share price is actually trading above where most analysts believe it should be. That’s a real turnaround because UK banks, in recent years, traded at huge discounts to the share price targets.

In fact, the stock’s now trading way above the commonly-used 50-day Simple Moving Average tool, suggesting recent gains have come quickly rather than steadily.

So what’s changed?

Retail investors often follow the money

Investors often follow the money, and in HSBC’s case the direction’s become clearer. Materially higher interest rates for a sustained period have lifted net interest income, while cost discipline and asset sales have sharpened the group’s focus on its most profitable markets.

At the same time, sizeable capital returns — through dividends and buybacks — have helped reset perceptions around shareholder value.

And this creates its own momentum in time. And don’t get me wrong, momentum’s often one of the strongest indicators of forward performance. But it won’t go on forever if fair value’s significantly exceeded.

And this is where investors have to be careful.

What analysts are saying

Institutional analysts have been constantly revising their forecasts upwards for HSBC. That’s a really good sign. In fact, expectations for 2025 increased by around 15% during the year.

However, as noted before, the share price now exceeds what analysts believe to be fair value by around 7.3%. The majority of ratings are Hold (eight), with five Buy ratings and two Strong Buys.

Institutional analysts can be wrong, and I often question the quality of the analysts themselves. However, HSBC’s a fairly big assignment and I’d suggest these analysts are a little more senior than the ones covering Greggs. As such, it’s worth giving some credence to the forecasts.

On dividends, the forward yield is expected to be around 4.7% for the coming 12 months. That’s above the index average and is covered two times by earnings. That’s a solid benchmark for sustainability.

What do I think?

Personally, I believe most blue-chip UK banks are trading with similar valuations. Yes, some have larger dividend yields and some trade with lower price-to-earnings ratios, but when adjusted accordingly, they’re roughly the same.

Having been a big bull on banks in recent years, I’m a little concerned that they may be peaking, in the near term at least. Remember, banks are cyclical and in the last 18 years there isn’t much precedent for banks trading with these multiples.

For context, HSBC’s trading around 10.7 times expected earnings for the coming 12 months.

What’s more, we need to remember they also reflect the health of the economies they serve. With that in mind, I’m increasingly moving to a more neutral position on UK banks. After all, the possibility of low/no economic growth in the UK in turn lead to fast declining interest rates, which could detract from the current shine. And yes, HSBC has global exposure. But the logic still stands.

It might sound like I’m being downbeat, but I’m still positive in the long run, and I think HBSC’s worth considering. However, I appreciate there might be some near-to-medium-term volatility.