Bank of Queensland Ltd (ASX: BOQ) shares are edging higher on Tuesday.
At the time of writing, the regional bank's shares are up 0.3% to $7.24.
Though, that doesn't do much for their year to date performance. They remain down 13% since the start of the year.
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Are Bank of Queensland shares in the buy zone?
Opinion remains divided on where Bank of Queensland shares are heading from here.
For example, Macquarie currently has a neutral rating and $7.50 price target on the bank's shares. This offers extremely modest upside from current levels.
Goldman Sachs is also sitting on the fence and has a neutral rating and $8.51 price target. While this implies decent upside for its shares, the broker believes there are better options in the sector for investors to buy. It explained:
Despite valuation support, we believe its NIM leverage will ultimately underperform peers and its expenses will remain under pressure given the current inflationary environment and headwinds from running legacy systems along with building its new digital bank, which are expected to offset ME Bank synergies and restructuring benefits.
Who is bullish?
The team at Citi is bullish and sees plenty of upside for Bank of Queensland's shares.
Its analysts currently have a buy rating and $8.75 price target on the company's shares. This implies potential upside of almost 21% for investors over the next 12 months. Citi also expects an ~8% dividend yield in FY 2023.
The broker believes the market has been underestimating Bank of Queensland's leverage to rising rates. It highlights that management's commentary following its results release last month shows the opposite. Citi commented:
In our view, consensus has been underestimating the extent of rates leverage across the sector, which coupled with a view that BOQ has less rates leverage than peers. This had left very modest NIM expectations for FY23. Today, management dispelled these modest expectations, with bullish commentary on the exit NIM.
Time will tell which brokers make the right call on Bank of Queensland shares.
