The difficult year continued yesterday for ASX financials stocks Bank of Queensland Ltd (ASX: BOQ) and MA Financial Group Ltd (ASX: MAF).
Both companies hit fresh 52-week lows after falling roughly 1.5% each.
Bank of Queensland shares are now down 22% over the past year. Meanwhile MA Financial Group is down more than 14%.
These falls have far exceeded the minor fall from the S&P/ASX 200 Financials Index (ASX: XFJ) in the same period.
While both have been impacted by sector headwinds, it appears they have now been oversold, creating an exciting buy low opportunity.
Here is what brokers are saying about these ASX financials stocks moving forward.
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Can BOQ shake off poor results?
Bank of Queensland shares have suffered mightily since reporting disappointing half-year results last month.
Investors were disappointed when the bank reported a 4% increase in revenue to $835 million, but a 20% drop in statutory net profit after tax to $136 million.
On the positive side, BOQ's business mix continued to shift towards commercial lending, which grew by 16% over the half, while housing loan balances contracted.
There's no doubt there are short term headwinds for ASX bank and financial stocks in the short term.
Bank of Queensland remains heavily exposed to Australian housing lending. Competition for mortgages is intense, particularly from the major banks, forcing lenders to offer sharper pricing.
This creates short term mortgage margin pressure, and Band of Queensland lacks the scale and low-cost deposit franchise of the Big Four banks. To attract and retain deposits, it often has to pay more competitive rates, which can squeeze profitability.
However the case for this ASX financials stock lies more in the value opportunity after being heavily sold off in the last year.
It now sits at a yearly low of $6.11 per share.
Morgans recently upgraded the stock to an accumulate rating largely on valuation grounds.
Band of Queensland now sits 21% below the share price target from the broker of $7.39, making it an attractive buy-low option.
MA Financial Group has 50% upside
Meanwhile, it's a similar story for MA Financial Group, which also appears to be undervalued.
This ASX financials stock has continued to drop since its quarterly trading update in late April.
But now sitting at yearly lows, brokers see plenty of rebound potential.
It has recently attracted a buy rating by Ord Minnett, along with a target price of $9.20.
This is almost 50% higher than the current share price, as the broker sees multiple growth drivers across its business lines.
We see an attractive value proposition in MA Financial, with the stock trading on a one-year forward price-to-earnings (P/E) multiple of 14.7x, along with a forecast EPS compound annual growth rate (CAGR) of 23% over the FY25–28 horizon.
