The team at Morgans has just provided updated guidance on two Australian bank shares.
Both Bank of Queensland Ltd (ASX: BOQ) and Westpac Banking Corp (ASX: WBC) have brought investors strong returns this year compared to the broader market.
Year to date, Bank of Queensland shares have risen almost 12% while Westpac shares have risen 6.5%.
For context, this has far outpaced the S&P/ASX 200 Index (ASX: XJO) which is up 2.8% in the same period.
Let's see Morgans' updated guidance on these two ASX bank shares.
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1H26 result preview for BOQ
Bank of Queensland has been one of the best performing ASX financials stocks so far this year.
At the time of writing, BOQ shares are exchanging hands for $7.40.
The company is set to release half-year results and an interim dividend announcement on the 22 April.
In a recent note out of Morgans, the broker said it expects a material decline in 1H26 earnings, with recent share price strength driven by the expected capital return from the equipment finance whole-of-loan sale.
Share price strength has compressed total return potential to c.5%. As such, we moderate our rating from ACCUMULATE to HOLD.
The broker has a current share price target of $7.39.
This indicates BOQ shares are currently trading at fair value.
Westpac shares a sell
Turning attention to Westpac shares, the broker said the company published a trading update yesterday ahead of its 1H26 result due for release on 5 May.
In the trading update, Westpac noted the supply shock from the energy market disruption is expected to result in higher inflation and higher interest rates.
An expected slowing in economic growth will create a more challenging environment for some customers.
This update led to a 2.9% share price drop yesterday for the bank shares.
It also triggered a sell recommendation from the team at Morgans.
Implied revenues were weaker, costs lower, and credit impairment charges higher than our and market expectations. We revise our rating from TRIM to SELL as total return expectations at current prices have fallen below the -10% trigger. We estimate c.18% price downside risk partly offset by c.3.8% forecast cash yield.
The broker has a current price target of $34.06 on Westpac shares.
This indicates a downside of nearly 18% from the current share price of $41.48.
