Axos Financial target lifted to $80 by Raymond James

Overall, Raymond (NSE:RYMD) James views the risk/reward profile for Axos Financial (NYSE:AX) as favorable, citing the bank’s attractive price-to-earnings (P/E) valuation and potential catalysts for growth. InvestingPro data supports this view, revealing a P/E ratio of 8.6 and an excellent Piotroski Score of 7, indicating strong financial health. InvestingPro subscribers have access to 6 additional key insights about Axos Financial, along with comprehensive financial metrics and expert analysis in the Pro Research Report, helping investors make more informed decisions. InvestingPro data supports this view, revealing a P/E ratio of 8.6 and an excellent Piotroski Score of 7, indicating strong financial health. InvestingPro subscribers have access to 6 additional key insights about Axos Financial, along with comprehensive financial metrics and expert analysis in the Pro Research Report, helping investors make more informed decisions.

The firm’s analysts expect the NIM, which was reported at 4.44%, to stay above the targeted range of 4.25-4.35% for a longer period, although they anticipate it will return to the higher end of the range in the upcoming quarters. Expense management was also highlighted as a key strength, with the company leveraging technology and artificial intelligence to enhance efficiency. This operational excellence is reflected in the company’s impressive 22.6% revenue growth and strong return on equity of 22% over the last twelve months.

Despite solid mid-single digit loan growth, it was slower than anticipated due to higher payoffs and paydowns. However, management at Axos Financial has indicated plans to introduce more competitive pricing in certain products, such as jumbo single-family residential and multifamily loans, to mitigate the impact and support higher growth projections in the second half of fiscal year 2025.

The report also pointed out Axos Financial’s significant financial flexibility, bolstered by an at-the-market (ATM) offering announced alongside the earnings release. While organic growth remains a priority, the possibility of inorganic growth through mergers and acquisitions was mentioned as a potential opportunity, especially in the context of increased industry consolidation.

Credit conditions are normalizing, and the management’s proactive and conservative approach is expected to result in minimal losses, given the conservative underwriting of the bank’s portfolio. Raymond James projects the bank to achieve a roughly 47% efficiency ratio, supporting a low-double digit pace of pre-provision net revenue (PPNR) growth, high-teens return on average tangible common equity (ROATCE), and approximately 20% tangible book value (TBV) growth in fiscal year 2025.

Overall, Raymond James views the risk/reward profile for Axos Financial as favorable, citing the bank’s attractive price-to-earnings (P/E) valuation and potential catalysts for growth.

In other recent news, Axos Financial reported robust earnings and revenue for its fiscal second quarter, surpassing consensus estimates. The financial institution posted adjusted earnings per share of $1.82, exceeding projections of $1.75. Revenue also outperformed expectations, coming in at $307.9 million against forecasts of $303.63 million. Concurrently, Axos Financial entered into an equity distribution agreement with Keefe, Bruyette & Woods, Inc., and Raymond James & Associates, Inc., potentially enabling the sale of up to $150 million in common stock.

Axos Financial’s net interest income increased by 22.5% year on year to $280.1 million, primarily due to elevated interest income on loans and deposits at other financial institutions. The firm’s provision for credit losses was $12.2 million, a decrease from $13.5 million in the same quarter last year. Additionally, Axos Financial managed to reduce interest-bearing deposit costs by 51 basis points from the previous quarter, while maintaining steady deposit balances.

Lastly, Axos Financial’s book value per share increased by 20.9% year on year to $44.17, indicating strong capital ratios. These recent developments form part of Axos Financial’s strategic financial initiatives and are based on a press release statement.

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