Judo Capital Holdings Ltd (ASX: JDO) has had a poor start to 2026. The specialist SME lender has been down 20% since the start of this year. The drop has raised the doubts of investors on whether the stock is a good buy.
But analysts at Ord Minnett think there are important developments that the market is missing out on. The broker recently reviewed Judo Capital following a major funding transaction and maintained a positive outlook on the company.
The assessment suggests the ASX 200 bank stock could deliver significant gains if management continues executing its growth strategy.
Judo Capital shares have declined 20% in 2026 despite recent positive funding developments. [Courtesy: ASX]
Why Is This ASX Bank Stock Gaining Attention?
Ord Minnett’s renewed optimism follows Judo Capital’s successful note securitisation issue. The lender raised $750 million through the transaction after initially seeking $500 million from investors.
The strong response resulted in the offer being upsized. Investor participation came from local and offshore institutions, superannuation funds, fixed-income investors and bank balance-sheet buyers.
According to the broker, the transaction highlights growing confidence in Judo’s lending model. It also demonstrates continued demand for exposure to SME-focused credit opportunities.
For investors looking at ASX bank stocks to double money, the funding success may represent an important signal of market confidence.
What Makes The $750 Million Deal Significant?
The funding transaction delivered several benefits for Judo Capital. Ord Minnett believes the deal strengthens the company’s financial position while expanding future growth options.
Key benefits include:
- $750 million raised versus the original $500 million target.
- Strong support from domestic and international investors.
- Improved pricing compared with previous securitisation transactions.
- Reduced pressure on regulatory capital requirements.
- Greater funding flexibility for future lending growth.
The broker noted the issue priced at 171 basis points above the one-month bank-bill swap rate. This is an improvement on Judo’s first transaction in September 2023 of 273 basis points.
The enhanced rate is due to increased investor demand and confidence in the lender’s creditworthiness.
What does the Balance Sheet look like?
One of the biggest concerns among investors had been the possibility of an equity raising. Ord Minnett believes the securitisation deal has eased those fears considerably.
The broker estimates the transaction lifted Judo’s pro forma common equity tier-one ratio to 13.2% at 31 March. This compares with the reported CET1 ratio of 12.6%.
Important capital metrics include:
- Pro forma CET1 ratio of 13.2%.
- Reported CET1 ratio of 12.6%.
- Forecast CET1 ratio of 12.6% at 30 June.
- Capital levels above the market’s preferred 12% threshold.
A stronger capital position provides additional flexibility and may improve investor confidence going forward.
The securitisation issue strengthened Judo Capital’s capital position and eased equity raising concerns. [Courtesy: Judo Bank]
Why Does Ord Minnett Expect Strong Growth?
While securitisation funding can be more expensive than wholesale funding, Ord Minnett sees important long-term advantages.
The structure enables Judo to free up its regulatory capital and to share some of the credit risk with third-party investors. This can help to increase the efficiency of capital and lead to better returns on equity in the long run.
The broker thinks that these advantages might boost gains. Consequently, if Judo’s results meet or exceed their expectations, they might be earning higher than the market rate.
The funding strategy also offers another path for future growth without over-reliance on the traditional funding sources.
What is Earnings Growth expected?
Ord Minnett remains particularly positive about Judo’s earnings outlook. The broker forecasts a compound annual growth rate of 40% for earnings per share.
Several factors underpin this expectation:
- Growing SME lending demand.
- Improved capital efficiency.
- Expanded funding sources.
- Better balance-sheet flexibility.
- Potential improvement in return on equity.
Such growth projections stand out within the Australian banking sector. Investors searching for ASX bank stocks to double money often focus on companies capable of delivering sustained earnings expansion.
Ord Minnett forecasts a 40% earnings per share CAGR for Judo Capital. [Courtesy: Motely Fool]
What Risks Should Investors Consider?
However, there are a number of obstacles for Judo Capital. The company’s continued high exposure to wider economic parameters is as a result of its SME lending focus.
There is a sensitivity to economic growth, inflation and energy prices among business borrowers. Operating conditions could be adversely affected, which would have an impact on loan quality.
Ord Minnett also highlighted geopolitical risks. The broker believes calmer energy markets and improved global stability could support SME performance. However, ongoing uncertainty may create volatility for the lender and its shareholders.
Investors should recognise that Judo’s earnings profile may be more variable than larger diversified banking groups.
Could Judo Capital Deliver A 70% Share Price Gain?
Ord Minnett has affirmed its buy rating and price objective of $2.40 a share on the stock.
Based on Judo Capital’s last closing price of $1.43, the target implies potential upside of almost 70% over the next 12 months.
The confidence the broker has is a sign of better capital ratios, as well as a wider range of investment options and solid earning prospects. There are still risks, but recent developments have helped to improve sentiment around the company.
The company’s performance comes as investors continue assessing investment opportunities across the ASX financial sector amid changing economic conditions.
Also Read: Judo Expands Board with New Director Appointment
FAQs
Q1: What Does Judo Capital Do?
A1: Judo Capital is an Australian bank specialising in lending to small and medium-sized enterprises. It is traded on the ASX under the code JDO.
Q2: How Much Money Did Judo Raise?
A2: The company sold a note securitisation for $750M. The size of the deal was enhanced from the initial $500 million.
Q3: What Is Ord Minnett’s Price Target For Judo?
A3: Ord Minnett has maintained a price target of $2.40 per share. This represents almost 70% upside from the recent share price of $1.43.
Q4: How is the Earnings Growth forecast?
A4: The broker expects the earnings per share to grow by 40% each year. The outlook is a result of the improved capital efficiency and funding flexibility.
Disclaimer
The information is provided for general information only and is not financial advice. Sources of information are public and broker comments. Before investing, investors are encouraged to make their own investment decisions after carrying out investment studies or getting advice from professionals. Share prices may change and historical performance is not a guarantee of future performance.
Source Links
- https://www.fool.com.au/2026/06/08/broker-says-this-asx-200-bank-stock-could-rise-almost-70/
- https://www.livewiremarkets.com/wires/broker-says-this-asx-bank-is-a-growth-stock-with-40-upside
