Goldman tips Bank of Queensland (ASX:BOQ) share price to rise 25%

Here’s why Bank of Queensland shares could be good value…

| More on:
A female financial services professional with a manicured black afro hairstyle turns an ipad screen to show a client across the table a set of ASX shares figures in graph format

Image source: Getty Images

If you’re interested in gaining exposure to the banking sector, then it could be worth considering Bank of Queensland Limited (ASX: BOQ) shares.

That’s the view of the team at Goldman Sachs, which see a lot of value in the regional bank’s shares at the current level.

What did Goldman say about Bank of Queensland’s shares?

According to a recent note, the broker has retained its buy rating and put a $9.67 price target on the bank’s shares.

Based on the current Bank of Queensland share price of $7.71, this implies potential upside of 25% over the next 12 months.

In addition, the broker is forecasting a fully franked 44 cents per share dividend in FY 2022. If you add this 5.7% dividend yield into the equation, the total potential return on offer is approximately 31%.

Why is the broker bullish?

Goldman Sachs was pleased with the bank’s recent annual general meeting update and notes that management has reaffirmed its FY 2022 guidance of at least 2% positive jaws (revenue growth versus expense growth).

The broker commented: “Our recently revised FY22E revenue growth on pro-forma FY21A had been 1.2% and costs of -0.4%. This compares to their updated implied revenue growth guidance of +1% (i.e. at least 2% positive jaws guidance) and expenses of -1%. Therefore, with costs run-rating mildly better than we had expected, we make minor revisions to our FY22/FY23/FY24E EPS of +0.5%/+0.4/+0.1% and our TP moves to A$9.67 from A$9.66.”

In addition, Goldman highlights that it likes the regional bank due to its margin pressure offsets, the ME Bank acquisition, and its attractive valuation.

“Overall we maintain our Buy recommendation on BOQ, which we believe has more offsets to these mortgage NIM pressures in the form of i) BOQ’s more rate sensitive deposit book, and ii) the continued delivery of ME Bank synergies. Coupled with 33% TSR [now ~31%] to our revised TP, we stay Buy,” it added.

Should you invest $1,000 in Bank of Queensland right now?

Before you consider Bank of Queensland, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Bank of Queensland wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares

A middle-aged woman sits in contemplation over a tablet device considering information about ASX shares and deep in thought.
Bank Shares

Is the NAB share price cheap with its recent pullback?

Here's the verdict according to analysts.

Read more »

An ASX shares broker analysing a chart tracking the A2 Milk share price
Bank Shares

Here’s why the CBA share price could soon be in for some pain

Is it buy or sell for CBA shares today?

Read more »

A woman looks shocked as she drinks a coffee while reading paper.
Dividend Investing

Hoping to bag the next Westpac dividend? Read this

Westpac shares will be one to watch out for over the coming days...

Read more »

A man in business pants, a shirt and a tie lies in the shallows of a beautiful beach as he consults his laptop on the shore, just out of the water's reach.
Dividend Investing

How does the Bank of Queensland dividend compare to the other ASX 200 banks?

We dive into how the Bank of Queensland dividend ranks against the big banks.

Read more »

Group of thoughtful business people with eyeglasses reading documents in the office.
Bank Shares

How has the Bank of Queensland share price travelled since the company’s half-year results?

Are Bank of Queensland shares in sync with the company's financial performance? Let's take a look.

Read more »

Gold piggy bank on top of Australian notes.
Dividend Investing

How does the ANZ dividend compare to the other ASX 200 banks?

ANZ is expected to pay a large dividend in FY22. How big will it be?

Read more »

A businessman keeps calm in the face of inflation

Inflation to ‘peak shortly’: CBA boss says markets have priced in too many rate rises

The big bank forecasts fewer rate hikes from the RBA than consensus expectations.

Read more »

Two brokers pointing and analysing a share price.
Bank Shares

Broker says the CBA share price is expensive and a sell

CBA's Q3 update smashed expectations but one leading broker remains bearish...

Read more »