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Investing.com - Raymond (NSE:RYMD) James maintained its Market Perform rating on Live Oak Bancshares (NYSE:LOB), a $1.47 billion market cap bank, following its second-quarter 2025 results, which exceeded forecasts. According to InvestingPro data, the stock appears slightly undervalued at current levels, with shares trading at a P/E ratio of 20.46.
The investment firm cited concerns about the health of the broader economy given the nature of Live Oak’s Small Business Administration (SBA (LON:SBA)) loan portfolio, despite the bank’s strong financial performance. Raymond James noted that while losses have remained elevated, fewer defaults, stable past due balances, and improving nonaccruals suggest the small business credit cycle may be nearing its end. InvestingPro analysis shows the bank maintains a GOOD financial health score of 2.54, with particularly strong metrics in cash flow management.
Raymond James highlighted several positive fundamental trends for Live Oak, including growth that continues to exceed forecasts with solid pipelines likely supporting a pace exceeding 15% going forward. The bank’s core deposit trends remain favorable, with improved pricing and funding growth supporting net interest margin expansion. InvestingPro Tips highlight that Live Oak has been profitable over the last twelve months and analysts expect continued profitability this year. Unlock 4 additional exclusive ProTips and comprehensive analysis with an InvestingPro subscription.
The investment firm expects Live Oak to benefit from continued net interest margin expansion despite anticipated Federal Reserve rate cuts, citing backbook repricing and improved funding costs. Raymond James also views the bank as an early adopter and likely beneficiary of artificial intelligence given its culture.
While acknowledging that Live Oak is positioned for improving profitability and operating leverage, Raymond James concluded that broader concerns about SBA credit in an uncertain economic backdrop currently create a balanced risk/reward profile for the stock.
In other recent news, Live Oak Bancshares reported its Q2 2025 financial results, which exceeded analyst expectations. The company achieved an earnings per share of $0.51, slightly above the projected $0.50. Revenue also surpassed forecasts, reaching $143.7 million compared to the anticipated $139.25 million. These results highlight the company’s ability to perform better than market predictions, contributing to investor confidence. Additionally, the positive financial performance may influence future analyst assessments and investment decisions. As these developments unfold, Live Oak Bancshares continues to attract attention from financial analysts and investors.
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