The Bank of Queensland Ltd (ASX: BOQ) share price has struggled in 2022 and is now 8% lower this year to date.
After a rocky period, Bank of Queensland shares slipped from their former high of $8.68 at the end of March and are now trading at $7.42 each at the time of writing. That’s a new 52-week low.
Are brokers bullish on the BOQ share price?
Analysts at JP Morgan have scaled back their outlook on Bank of Queensland shares in a recent note to clients.
The broker said:
BOQ’s 1H FY22 underlying result was softer than expected, driven by lower [net interest margin] NIM and average balances, while non-interest income one-offs and provision write-backs boosted the reported numbers.
The NIM headwind from asset pricing and mix was alarming at -16bps and while this should ease in 2H, it is indicative of an ultra-competitive home loan market as well as raising questions about BOQ’s view that it is driving ‘quality growth’.
Capping off its assessment, the broker remarked that BOQ “remains a work-in-progress, offers little leverage to rising rates, and is most exposed to likely deterioration in [term deposit] TD spreads”. It’s hardly an upbeat view.
Meanwhile, banking industry analysts at Bloomberg Intelligence are equally as downbeat on the bank’s growth prospects.
Analysts Matt Ingram and Jack Baxter wrote:
Bank of Queensland’s 8% [return on equity] ROE may continue to remain below those of Australia’s big banks due to clients’ low fee trend and its exit from insurance, but margin tailwinds from 2H rising RBA cash rates could help offset.
“[The bank’s] 8% ROE may stay below peers’ 10% average as it could struggle to lift revenue-to-assets of 1.4% up to peers’ 2.3%, given the trend to low/no fee products and its underweight to credit cards.
Meanwhile, as TMF reported yesterday, analysts at Morgans hold the opposite view, noting they see “exceptional value in Bank of Queensland’s stock”.
Unlike its peers, the broker doesn’t expect BOQ’s NIM to come in any worse than the “industry-wide trend”.
Not only that, but “cost synergies associated with the ME Bank acquisition are being realised at a faster rate than originally anticipated”, according to Morgans.
It values BOQ at $11 per share on a buy rating, whereas JP Morgan rates it a hold at an $8.30 per share valuation.
The pair are joined by eight other analysts advocating to buy and six saying to hold at this point in time, according to Bloomberg data.
The consensus price target from this group is $9.18, suggesting an approximate 24% upside from the current share price.
In the last 12 months, the BOQ share price has crept down 17% into the red and is down 8% this year to date.