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:

• Implied Volatility Surging for Axos Financial Stock Options

Latest Ratings for AX

View More Analyst Ratings for AX

View the Latest Analyst Ratings

UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets.

Get the latest stock analysis from Benzinga?

This article Axos Financial 'Ahead of Its Time,' Analyst Applauds Digital-First Strategy originally appeared on Benzinga.com

? 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.