Looking for an S&P/ASX 200 Index (ASX: XJO) bank stock that can outperform despite the broader forecast sectoral headwinds in the year ahead?
Then you might want to look into Judo Capital Holdings Ltd (ASX: JDO).
That's according to the team at Macquarie Group Ltd (ASX: MQG), who just raised their 12-month price target on Judo shares and maintained their outperform rating.
On Wednesday, shares in Judo Bank, which focuses on lending to small and medium sized enterprises (SMEs), closed up 2.85%, trading for $1.81 apiece.
That sees shares in the ASX 200 bank stock up 15.71% in the last month, though shares remain down 2.43% in 2025.
Now, here's why Macquarie is bullish on Judo shares in FY 2026.
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ASX 200 bank stock tipped to outperform
Judo Bank reported its full-year FY 2025 results on Tuesday, 19 August.
The ASX 200 bank stock ended the day in the green after reporting statutory net profit after tax (NPAT) of $86.4 million, up 24% from FY 2024.
And Judo Bank's loan book grew by 16% over the year to $12.5 billion, while deposits increased by 20% to $9.9 billion.
"Judo has delivered another solid set of results for FY25, while achieving several major operational milestones that will allow us to continue to successfully execute our strategy in FY26 and beyond," Judo Bank CEO Chris Bayliss said on the day.
Bayliss added, "Judo's growth has followed a deliberate three-phase strategy: to build the bank; then to scale the bank; and now, as we enter FY26, to optimise the bank."
Looking at the full 2026 financial year, the ASX 200 bank stock provided guidance of profit before tax of between $180 million and $190 million. Judo expects to grow its lending to the range of $14.2 billion to $14.7 billion.
Analysing the results, Macquarie noted that the bank is focusing on the future.
According to the broker:
Judo's FY25 result was positive (beating consensus pre-provision earnings), but more focus was placed on its FY26 guidance. Its updated guidance does not suggest an upgrade to consensus (~50% earnings growth); however, we liked the detailed building blocks provided.
JDO is executing well on its strategy, tapping into new markets, and creating more growth levers. We continue to forecast strong earnings growth over the next few years (>30% [compound annual growth rate] CAGR).
Connecting the dots, Macquarie said, "While we acknowledge its current low returns, trading at 11x FY27E PE with >30% CAGR earnings, valuations appear attractive."
The broker maintained its outperform rating on the ASX 200 bank stock and increased its 12-month target price for Judo Bank shares to $1.90 (from $1.80).
