Axos Financial (NYSE: NYSE:AX) received a new coverage initiation from Needham with a positive outlook.
The financial services provider was granted a Buy rating and given a price target of $82.00. Needham's analysis highlighted Axos Financial's position at the intersection of digital lending and banking, leveraging its full-banking license to offer a diverse range of services including lending, banking, and securities/investing.
The firm pointed out Axos Financial's strategic advantage in not operating a broad-based branch network, which contributes to higher profitability and efficiency. This approach also allows the company to expand its Total Addressable Market (TAM) compared to traditional banking institutions.
Needham underscored the attractive valuation of Axos Financial's shares, citing a forward price-to-earnings (P/E) ratio of 8.2 times for the fiscal year 2026 and a price-to-tangible book value (TBV) multiple of 1.2 times for the same period.
In other recent news, Axos Financial appointed Ann Gill as the new Senior Vice President and Chief Accounting Officer, a move confirmed by the Board of Directors. In the fiscal year 2024's fourth quarter, Axos Financial reported earnings per share (EPS) of $1.80, aligning with market consensus but slightly below Piper Sandler's expectation by one cent.
Axos Financial's net interest income did not meet Piper Sandler's projections as the net interest margin decreased to 4.65%. However, provisions for credit losses were lower than anticipated at $6 million, and a favorable tax rate helped offset these differences.
In response, Wall Street firms, including BofA Global Research, JPMorgan, Goldman Sachs, Citi, TD Securities, and Barclays, have revised their forecasts, expecting more aggressive interest rate cuts by the Federal Reserve due to a weaker than expected U.S. employment report for June.
Keefe, Bruyette & Woods maintained an Outperform rating and a $79.00 stock price target for Axos Financial, even after a short seller report questioned the company's commercial real estate exposure and underwriting practices.
InvestingPro Insights
Needham's positive outlook on Axos Financial (NYSE:AX) is further supported by real-time data and insights from InvestingPro. The company's P/E ratio of 7.73 aligns with Needham's assessment of attractive valuation, trading even lower than the forward P/E of 8.2 times mentioned for fiscal year 2026. This is reinforced by an InvestingPro Tip indicating that Axos is "trading at a low P/E ratio relative to near-term earnings growth."
The company's strong financial performance is evident in its impressive revenue growth of 20.45% over the last twelve months, with an even higher quarterly growth of 24.17% in Q4 2024. This growth trajectory supports Needham's view of Axos's expanding market presence and potential for future success.
Axos's profitability is notable, with an operating income margin of 53.21% for the last twelve months, showcasing the efficiency highlighted by Needham. An InvestingPro Tip confirms that Axos has been "profitable over the last twelve months," and analysts predict continued profitability this year.
The stock's performance has been robust, with a one-year price total return of 63.23%, indicating strong investor confidence. This aligns with another InvestingPro Tip noting a "high return over the last year."
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 8 additional InvestingPro Tips available for Axos Financial, providing a deeper understanding of the company's financial health and market position.
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