The Bank of Queensland Ltd (ASX: BOQ) share price is under pressure on Wednesday.
In morning trade, the regional bank's shares are down 2% to $5.65.
Why is the Bank of Queensland share price falling?
The catalyst for this decline appears to have been the release of a bearish broker note out of Goldman Sachs.
According to the note, its analysts have downgraded the bank's shares to a sell rating with a $5.60 price target.
This implies a touch more downside for Bank of Queensland shares despite already being down 16% over the last 12 months.
Why is the broker bearish?
Goldman named five key reasons why it has downgraded the bank's shares. This includes cost inflation concerns and weak volumes. It explains:
We downgrade BOQ to Sell with a A$5.60 target price, reflecting: i) while the company's transformation program is the right long-term strategy to deliver a stronger and simpler bank, we believe it does leave the bank more exposed to inflation in non-staff costs, ii) while management appears to be responding to these issues and will announce details of a productivity initiative at its FY23 result, we are concerned by the operational risks and cost pressures involved in undertaking such an initiative, iii) BOQ's volume momentum remains weak, and while this is partly due to management's efforts to protect profitability, BOQ is the only FY24 NIM that Visible Alpha consensus currently expects to be below where forecasts were at the beginning of 2021, before rates started to rise, and v) our revised target prices of A$5.60 offers 3% downside to the current share price, towards the bottom end of our A&NZ Financials coverage.
Goldman's preference remains ANZ Group Holdings Ltd (ASX: ANZ), which remains on its coveted conviction list.
