Bank of Queensland Ltd (ASX: BOQ) shares are under pressure on Tuesday afternoon.
At the time of writing, the ASX 200 bank share is down over 1% to $6.12.
Why is this ASX 200 bank share falling?
The weakness in the Bank of Queensland share price today could have been driven by a bearish broker note out of Goldman Sachs this morning.
According to the note, the broker believes investors should be selling the ASX 200 bank share ahead of the release of its half-year results release later this month.
Goldman is expecting the bank's earnings to come in well short of expectations during the first half.
For example, its analysts have pencilled in cash earnings of $154 million for the half. This is 6.1% lower than the consensus estimate of $164 million.
In light of this, it also expects the ASX 200 bank share's dividend to disappoint. Goldman is forecasting an interim dividend of 16 cents per share, which is 7.5% lower than the consensus estimate of 17.3 cents per share.
This is expected to be driven by a combination of lower than consensus average interest earning assets and a softer than expected net interest margin (NIM).
Major downside
Goldman has reiterated its sell rating with a price target of $5.04. Based on where the ASX bank share currently trades, this implies 18% downside for investors.
Its analysts explained their bearish stance of Bank of Queensland. They said:
BOQ is an Australian bank offering retail and commercial banking, financial services and insurance. We are Sell-rated on BOQ given: i) while the company's transformation program is the right long-term strategy to deliver a strong and simpler bank, we believe it does leave the bank more exposed to inflation in third party distribution costs, and ii) we are concerned by the operational risks and costs pressures involved in undertaking such an initiative, furthermore iii) BOQ's volume momentum remains weak, and while this is partly due to management's efforts to protect profitability, BOQ's FY23/2H23 NIM fell materially (notably below market expectations) and we do not expect margin pressures to ease given the current challenging environment (intense competition in both lending and deposits). Our 12-month target price offers downside to the current share price, towards the bottom end of our A&NZ Financials coverage.
All in all, the broker feels that this is one ASX 200 bank share that investors should stay away from right now.
