The Bank of Queensland Ltd (ASX: BOQ) share price has been having a tough time in recent months.
For example, over the last six months, the regional bank's shares have lost approximately 17.5% of their value.
This has left Bank of Queensland trading at $6.36, which is within a whisker of its 52-week low.
Don't jump in just yet
The team at Morgans believes investors should keep their powder dry for the time being. Particularly with its results just days away.
According to the note, the broker has downgraded the bank's shares and taken an axe to its price target. It now has a hold rating (previously add) and $6.75 price target (previously $11.00) on them.
The broker made the move in response to the release of a disappointing half-year trading update last week. The broker commented:
BOQ disclosed unaudited 1H23 cash NPAT of $256m (+7% vs 2H22), c.3% below consensus. Detailed profit disclosure was deferred to the result release. We expect c.6% sequential increase in pre-provision operating profit, mainly driven by c.3% increase in net interest income (+c.5% avg. interest earning assets, flat NIM noting CBA's NIM peaked in October) and +c.2% jaws. We assume the credit impairment charge is mildly higher in 1H23 vs 2H22.
Why is it not more positive on the Bank of Queensland shares?
Although Bank of Queensland shares are trading close to a 52-week low, Morgans explained why it isn't recommending them as a buy just yet. It said:
While we can see valuation support at higher share prices, there are a number of factors that make us cautious: implied mgmt. depth/strength and risk implications from the CEO turmoil; investor risk aversion to smaller banks during a run of offshore bank issues and heading into a weaker economic environment; asset base concentrated on the highly competitive home lending market, but with scale, funding cost and technology disadvantages compared to the majors; and execution risk and lack of clarity on the financial benefit of the digital bank transition.
