What's the forecast for the CBA share price in August?

Twelve out of 15 analysts on Commsec say CBA shares are a sell.

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Key points

  • CBA shares have gained 4.75% in 2023, closing at $105.85 apiece yesterday
  • The banking giant is underperforming the benchmark S&P/ASX 200 Index, which is up 7.3% this year 
  • One top broker thinks the CBA share price will fall to two-year lows over the next 12 months 

The Commonwealth Bank of Australia (ASX: CBA) share price is pretty much a non-performer in 2023.

CBA shares have risen by 4.75% this year-to-date to $105.85 apiece at the close of trading yesterday.

This compares to a 7.3% bump for the benchmark S&P/ASX 200 Index (ASX: XJO).

Analysts are in general agreement that the short-term outlook for the CBA share price is pretty negative.

Among 15 analyst opinions collated by Commsec, three experts say CBA is a hold, and 12 say sell.

That's one heck of a majority.

What will happen to the CBA share price in August?

The CBA share price rose 0.13% on 1 August, which also marked the beginning of earnings season.

This followed news that the bank has run up $212 million in costs across two items in 2H FY23.

Yesterday's announcement comes ahead of the bank's full-year results on 9 August.

Obviously, there will be a market reaction to those results.

So, the CBA share price will be on watch next Wednesday.

In terms of other predictions for the CBA share price in August, analysts are pessimistic.

As we reported recently, top broker Macquarie says there is "limited scope for banks to re-rate from current levels" and "the risk to multiples in the near term remains skewed to the downside …"

'Upside is limited' on CBA share price

The latest broker to comment on CBA stock is Stuart Bromley of Medallion Financial Group.

He reckons the "upside is limited in the near term" on the CBA share price.

Bromley told The Bull this week:

The shares have risen from $95.80 on June 9 to trade at $106.43 on July 27.

The price provides an opportunity to consider trimming shares based on our view of possibly lower net interest margins and slowing credit growth.

In our opinion, upside is limited in the near term. We will reconsider our position on CBA should we see a price retreat.

Other fundies seem to agree, with many quitting bank shares in favour of insurance shares lately.

But we have to remember that professional fund managers are focused on near-term movements.

That's because they're aiming to deliver above-average returns for their clients every year, so they move their positions around frequently to deliver good short-term results.

But ordinary investors with a day job don't have time to watch the market that closely.

Instead, they buy blue chips like CBA shares and adopt the tried and tested buy-and-hold strategy that Fool also recommends.

CBA shares are a classic buy-and-hold stock

Bromley notes that CBA is "a high quality business that many investors hold for the long term", which is exactly why many people will simply sit on their stock no matter what happens this month. 

In fact, if the CBA share price is going to fall in August, some investors may take the opportunity to buy the dip for dollar-cost averaging benefits.

For your reference, CBA has a 52-week low of $89.66 and a 52-week high of $111.43.

Citi has a sell rating on CBA and predicts it will fall to two-year lows over the next year.

The broker has a 12-month price target of $82.50 on the stock.

CBA share price history

Over the past five years, the CBA share price has gone up by 45.3%.

This is a vast outperformance on the other three of the 'big four' ASX 200 bank shares.

Over the same period, the Westpac Banking Corp (ASX: WBC) share price dropped 22.4%.

The ANZ Group Holdings Ltd (ASX: ANZ) share price has also fallen 8.9% over five years.

National Australia Bank Ltd (ASX: NAB) shares have risen by a paltry 3.4% over the period.

This is exactly why retail bank shares are generally considered dividend plays, not growth stocks.

The two exceptions are CBA and Macquarie Group Ltd (ASX: MQG), which deliver both dividends and growth over the long term.

Incidentally, Macquarie shares have risen by 46% over the past five years.

What about CBA dividends?

CBA is expected to pay $4.35 per share in dividends in FY24, which is a yield of 4.1%.

Find out which ASX 200 bank share will pay the highest dividend yield in FY24 here.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Anz Group, Commonwealth Bank Of Australia, Macquarie Group, and Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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