On Thursday, Keefe, Bruyette & Woods adjusted their outlook on Axos Financial shares (NYSE:AX), increasing the price target to $79 from $77, while maintaining an Outperform rating on the company's stock. The adjustment comes in the wake of Axos Financial's impressive performance, with shares closing up 9.6% following the report of a substantial net interest income (NII) beat.
The financial institution's recent success can be partly attributed to the acquisition of loans from Signature Bank New York (OTC:SBNY), with the positive impact of this transaction being evident in the quarterly results.
Still, the firm's performance was not solely due to this factor. Axos Financial also reported a stable net interest margin (NIM) that was better than anticipated, consistent asset quality, and sustained loan growth.
The analyst from Keefe, Bruyette & Woods has revised the fiscal year 2024 and 2025 earnings estimates upwards by 7% and 2%, respectively. This revision is based on a higher starting point for the margin, which includes both core and all-in margins, leading to an increased NII forecast, especially in the short term.
Despite this optimistic adjustment, some caution is maintained as the firm still expects some downward pressure from potential rate cuts, anticipating four through the fiscal year 2025, on Axos's asset-sensitive balance sheet.
The new stock price target of $79 reflects confidence in Axos Financial's robust quarterly performance and its potential for sustained growth moving forward. The Outperform rating reiteration suggests that the firm's stock is expected to continue its positive trajectory.
InvestingPro Insights
Following the positive outlook from Keefe, Bruyette & Woods, Axos Financial (NYSE:AX) presents an interesting case for investors, underscored by several key metrics from InvestingPro. The company boasts a market capitalization of $3.18 billion, and its shares are trading at a P/E ratio of 7.75, which is considered low relative to its near-term earnings growth.
This is further reflected in an adjusted P/E ratio for the last twelve months as of Q3 2024, which stands at 7.17. Additionally, Axos Financial has shown a strong revenue growth of 30.99% during the same period, indicating potential for continued expansion.
InvestingPro Tips highlight that Axos Financial is trading at a low earnings multiple and does not pay a dividend, suggesting that the company may be reinvesting its earnings back into the business for growth. Furthermore, analysts predict the company will be profitable this year, a sentiment supported by its profitability over the last twelve months.
For those interested in a deeper dive into Axos Financial's performance and potential, InvestingPro offers additional insights and tips. There are currently 6 more InvestingPro Tips available for Axos Financial, which you can explore with the added benefit of a 10% discount on a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.
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