Bank of Queensland Ltd (ASX: BOQ) shares are rebounding on Thursday after yesterday's sell-off.
In afternoon trade, the regional bank's shares are up 3% to $5.51.
Why are Bank of Queensland shares rebounding?
It appears that investors have been buying the bank's shares today on the belief that they may have bottomed after yesterday's selling.
One broker that seems to believe this could be the case is Citi. In response to its results and share price decline, the broker has decided to take its sell rating off the bank's shares.
Citi has upgraded them to a neutral rating with a $5.35 price target.
What did it say?
While Citi remains a touch sceptical on management's forecasts for the coming years, it does trust that its margins will rebase this year. As a result, it suspects that the bank's earnings could be about to hit a bottom. Citi said:
Management indicated that FY24 has further headwinds, particularly as cost pressures remain. Despite the near-term headwinds, management reiterated their longer-term targets of 9.25% ROE & 50% CTI. To assist the market, this included a detailed rundown of $200m in productivity benefits.
In our forecasts, we still struggle to get anywhere near management's targets, and think that the implied revenue (~$2bn in FY26) is just too strong. However, a sooner rebasing of the NIM, coupled with outer year productivity benefits, gives us more comfort that at the very least FY24 could represent the trough in core earnings. With the stock having derated, we upgrade to Neutral.
Elsewhere, Morgans has retained its hold rating with a $5.22 price target and Ord Minnett has held firm with its buy rating with a lofty price target of $8.
