It's one of the most widely held dividend shares on the local market, but if the analysts at Goldman's Sachs are on the money the Commonwealth Bank of Australia (ASX: CBA) share price is set to fall over the next 12 months.
According to a June 4 research note out of the powerful investment bank, CBA shares should only be worth $70.45 in 12 months' time. Goldman's lists a few reasons for its bearish view on the stock including the weakening housing market, increased regulations, and "volatile equity markets".
Goldman's also noted that those banks that passed on the full 25 basis point Reserve Bank rate cut to their mortgage holders will also face earnings pressure. According to Goldman's analysis the banks would have to hold back 10 basis points of the cuts for them to be earnings "neutral" to the banks.
In fact quite a few banking analysts are predicting that more RBA rate cuts will hurt banks' profits and consequently could lead to dividend falls. There's nothing like dividend falls to all but guarantee falling bank share prices, as such Goldman's could be correct in assuming CBA shares have got ahead of themselves at $82.19.
