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Investing.com - Keefe, Bruyette & Woods (KBW) upgraded Live Oak Bancshares (NYSE:LOB) from Market Perform to Outperform on Tuesday, while raising its price target to $43.00 from $37.00.
The upgrade comes as part of KBW’s August Opportunities series, with the firm expecting several positive catalysts to drive the bank’s shares higher through the remainder of 2025.
KBW noted that Live Oak Bancshares shares have faced pressure since third-quarter 2024 reporting due to investor concerns about the recent Small Business Administration (SBA (LON:SBA)) credit cycle.
The research firm believes credit performance is set to improve in the second half of 2025, which should alleviate investor fears while the bank experiences accelerating pre-provision net revenue trends.
KBW projects Live Oak Bancshares to generate earnings per share growth ranking in the 95th percentile among KRX peers for both 2025 and 2026, which the firm believes should justify the bank reclaiming its historical valuation premium.
In other recent news, Live Oak Bancshares reported its second-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.51, slightly above the forecasted $0.50. The company’s revenue also exceeded projections, reaching $143.7 million compared to the expected $139.25 million. In addition to its financial performance, Live Oak Bancshares announced the pricing of an underwritten offering of 4,000,000 depositary shares, each representing a 1/40th interest in a share of 8.375% Fixed Rate Series A Non-Cumulative Perpetual Preferred Stock. The depositary shares are priced with a liquidation preference of $25 per share, with dividends payable at an annual rate of 8.375%, beginning in September 2025, if declared by the board.
Furthermore, the company appointed Jeffrey W. Lunsford to its board of directors, who brings three decades of technology leadership experience. Lunsford will also serve on the board of Live Oak Bank, the banking subsidiary of Live Oak Bancshares. Meanwhile, Raymond (NSE:RYMD) James reiterated its Market Perform rating for Live Oak Bancshares, highlighting the bank’s strong financial performance but expressing concerns about the broader economy due to the nature of its Small Business Administration loan portfolio. Despite elevated losses, Raymond James noted improvements in nonaccruals and fewer defaults, suggesting the small business credit cycle might be stabilizing.
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