Bank of Queensland Ltd (ASX: BOQ) shares are in the green today.
Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $6.55. In early afternoon trade on Tuesday, shares are changing hands for $6.66, up 0.2%.
That sees shares up 27% over 12 months, not including the 34 cents a share in fully franked dividends the bank has paid shareholders over this time.
Though, as you can see on the chart below, the past few weeks have seen the stock stumble, down 6.6% since market close on 17 October.
And, according to Novus Capital's John Edwards (courtesy of The Bull), Bank of Queensland shares could have a lot further to fall.
Time to sell Bank of Queensland shares?
"BOQ is one of Australia's leading regional banks," says Edwards, who has a sell rating on the ASX 200 bank stock.
The first reason Edwards is bearish on Bank of Queensland shares is the bank's falling income, which was reported at its full-year FY 2024 results on 16 October.
"Total income of $1.6 billion in fiscal year 2024 declined 8% on the prior corresponding period," Edwards notes.
The second reason to consider taking some profits now is the hit to the bank's interest earnings.
"Net interest income of $1.463 billion fell 9%," Edwards says.
And there was an even bigger fall in the bank's cash earnings, which marks the third reason investors might wish to sell today.
"Cash earnings per share were down 24%," Edwards points out.
The bank's 24% year on year drop in cash profits was fuelled in part by higher funding and technology costs, as well as inflation.
The 9% drop in net interest income was impacted by a 0.13% contraction in Bank of Queensland's net interest margin (NIM) and average interest-earning assets amid ongoing lending and deposit competition.
On the income front, the bank's FY 2024 home lending book was down $944 million from FY 2023.
According to Edwards:
The bank still appears expensive. In our view, it needs to cut costs and lift profits, which is a challenge in a fiercely competitive market.
Our 12-month share price target is $5.20. The shares were trading at $6.815 on October 24.
At the current $6.66 a share, Bank of Queensland shares have already slipped from the 24 October levels Edwards notes. But if Novus Capital has the price target correct, the ASX 200 bank stock could fall another 19.9% by this time next year.
