Axos Financial 'Ahead of Its Time,' Analyst Applauds Digital-First Strategy
Lekha Gupta 2 years ago
Analyst ColorEquitiesMid CapNewsPrice TargetInitiationAnalyst RatingsMoversTrading Ideas
Needham analyst initiates coverage on Axos Financial with a Buy rating and $82 price target. The company's digital-first strategy and full banking license set it apart from traditional banks for profitable growth.
Needham analyst Kyle Peterson initiated coverage on Axos Financial, Inc. (NYSE:AX) with a Buy rating and a price target of $82.00.
The analyst writes that, unlike traditional banks, the company avoids a broad branch strategy, enhancing profitability and efficiency while expanding its total addressable market.
Importantly, Axos Financial holds a full banking license, which offers stickier and cheaper funding for loans compared to warehouse lines and enables in-house banking products, adds the analyst.
The analyst says that Axos Financial was “ahead of its time” by prioritizing a digital-first strategy over building a branch network. Positive secular trends toward digital banking have allowed AX to establish itself effectively.
Peterson says that Axos Financial’s corporate culture distinguishes it from traditional banks, enabling the company to expand its total addressable market (TAM) and achieve efficient growth.
Axos Financial’s exceptional profitability stems from its robust underwriting and credit performance, as well as a streamlined expense structure, adds the analyst.
Peterson projects EPS of $7.05 in 2025 and $7.40 in 2026.
Investors can gain exposure to the stock via Principal U.S. Small-Cap ETF (NASDAQ:PSC) and WisdomTree U.S. SmallCap Fund (NYSE:EES).
Price Action: AX shares are up 5.25% at $63.58 at the last check Friday.
Photo via Shutterstock
Read Next: