Shares in Bank of Queensland Limited (ASX: BOQ) have been on the downward slope these past 2 months. In fact, they have lost more than 21% in that time.
The bank's share price tumbled off a 1 October closing high of $9.72 and hasn't recovered since. Instead, Bank of Queensland shares have set lower-highs and lower-lows in that time.
Whereas the S&P/ASX 200 Financials Index (ASX: XFJ) has slipped more than 8% in the last month, the bank's shares are down 13%.
In light of this, we've sifted through the scrolls of wisdom from the experts to try and understand what the outlook for Bank of Queensland investors might be this Christmas.
Here's what we found from leading investment banks Jefferies and JP Morgan.
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Is Bank of Queensland a buy for Christmas?
It depends on where you look and who you ask for this one. Analyst sentiment is spread thinly between bullish investors and those on the sidelines.
According to the team at Jefferies, however, perhaps not. The firm has a neutral rating on Bank of Queensland shares and values the bank at $7.50/share. At the time of writing, that implies a downside potential of around 2%.
Jefferies notes that Bank of Queensland's estimates for strong housing growth accompanied by a contraction in net interest margin (NIM) by 0.05%–0.07% in FY22 are susceptible to risk.
Analysts at the firm commented that "it's hard to think the BOQ NIM will not be similarly impacted" from risks other majors have faced, resulting in "NIM erosion" this year.
As such, the bank is Jefferies' least-preferred name out of all the Australian majors.
Meanwhile, the team at JP Morgan has a different opinion on the direction of Bank of Queensland shares.
It notes the bank's 2H FY21 cash earnings were 2% above internal estimates. It's also satisfied with its FY22 guidance outlook.
JP Morgan reckons that Bank Of Queensland appears "well positioned to deal with industry headwinds". It arrives at this stance partly due to near-term funding cost savings, which have further to fall than peers.
In addition, the firm sees potential for "optimisation in both its own deposit book and the funding mix of ME Bank." and notes, "cementing improvements in broker channel performance and the digital offering to customers."
The broker points to Bank of Queensland's large valuation discount from its peers. It argues the market is not paying for "synergies from the ME Bank acquisition, albeit we acknowledge that this will require careful execution."
In contrast to Jefferies, it likes Bank of Queensland the best out of all the majors alongside National Australia Bank Ltd (ASX: NAB). It slapped an outperform rating and $10 price target on the shares. That implies an upside potential of 31% at last check.
What's the sentiment on BOQ's share price?
In fact, of all the firms covering Bank of Queensland, 75% have it as a buy. Just 1 has it as a sell. The remainder are neutral on its share price.
Both Credit Suisse and Morgans are most bullish. These firm value Bank of Queensland at $11 per share and placing outperform and add ratings, respectively.
The consensus price target amongst this group is $9.62, in itself implying a margin of safety of 26% at the time of writing.
Evans and Partners disagrees, and reckons it is a sell with an $8 price target – a step above what Jefferies has the bank valued at.
So is Bank of Queensland one for under the Christmas tree this year? According to the bulk of analysts covering the share, most are bullish on the direction of its share price and recommend it as a buy.
However, analyst recommendations are only one drop in the bucket of investment reasoning one must undertake before making that decision. Remember to conduct your own due diligence before deciding whether it goes on your Christmas list.
