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On Thursday, DA Davidson revised its price target for Axos Financial (NYSE:AX) shares, lowering it to $84.00 from the previous $88.00, while continuing to endorse the stock with a Buy rating. Currently trading at $63.48, the stock maintains a modest P/E ratio of 8.7x, significantly below its peers. InvestingPro analysis reveals that three analysts have recently revised their earnings expectations upward, with price targets ranging from $80 to $90. The adjustment follows a quarter where Axos Financial outperformed expectations, delivering stronger earnings per share (EPS) and pre-provision net revenue (PPNR) per share, bolstered by robust fee income and well-managed expenses. The company’s impressive 25% year-over-year revenue growth and "GREAT" financial health score from InvestingPro underscore its solid performance. Discover more insights with InvestingPro’s comprehensive research report, available for over 1,400 US stocks.
The company reported a lower-than-anticipated provision for loan losses, which, along with a promising loan growth pipeline, suggests potential for sustained growth moving forward. Axos Financial’s asset quality indicators, including non-performing assets (NPAs), substandard loans, and special mention loans, showed improvement compared to the levels recorded on December 31.
The firm’s focus on maintaining an efficiency ratio below 50% was highlighted as a positive aspect, with intentions to keep expenses in check relative to revenue growth. The analyst at DA Davidson affirmed the Buy rating, despite the reduction in the price target, based on the company’s strong quarterly performance and sound financial strategies. InvestingPro data shows the company maintains healthy profitability metrics, with a return on equity of 19% and strong cash flow generation. For deeper financial analysis and more exclusive insights, explore InvestingPro’s advanced metrics and expert commentary.
In the statement provided by the analyst, the reasons behind maintaining the Buy rating were articulated, "AX’s quarter was stronger than projected, with the company coming in with stronger EPS and PPNR/share on the strength of stronger fee income, well-controlled expenses, and modestly lower than projected provision expenses. The loan growth pipeline appears to support solid growth from here, while asset quality metrics (NPAs, substandard, special mention) improved versus 12/31 levels. AX is focused on maintaining its sub-50% efficiency ratio and will continue to control expenses relative to revenue growth. Maintain BUY rating with a revised $84 PT."
In other recent news, Axos Financial reported its third-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $1.81, compared to the forecasted $1.72. The company demonstrated strong year-over-year growth in net interest income, which reached $275 million, marking a 5.3% increase. Axos Financial’s net income rose to $105.2 million from $104.7 million in the previous quarter, showcasing its effective cost management and strategic initiatives. The firm also announced that total deposits increased by 5.4% year-over-year to $20.1 billion. Despite these positive results, Axos Financial’s net interest margin experienced a slight decline, down 5 basis points year-over-year to 4.78%. Looking ahead, the company expects continued loan growth in the high single digits to low teens and anticipates maintaining a net interest margin at the high end of the 4.25-4.35% range. The company is also making strategic investments in technology and AI, which it believes will enhance operational efficiency. However, potential changes in California tax laws could impact deferred tax assets, presenting a risk to future earnings.
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