ASX bank stocks have come under pressure over the past month as concerns about the Federal Budget's property tax changes, higher interest rates, and ongoing global volatility continue to spook investors.
Analysts are mostly bearish about the outlook for ASX bank stocks over the next 12 months, with some tipping much more downside ahead.
But there are a couple of exceptions. And one of those is Judo Capital Holdings Ltd (ASX: JDO).
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What's the latest out of Judo Bank shares?
Judo Bank shares have fallen around 2% in Wednesday lunchtime trade. At the time of writing, the ASX bank stock is trading at $1.42 a piece.
The latest decline means the shares have now fallen around 9% since late-last week. But they're still 7% higher than a two-year low of $1.32 recorded two weeks ago today.
For the year-to-date, Judo Bank shares are down around 21% and around 4% lower than this time 12 months ago.
What do analysts tip next?
Analysts are very optimistic about the outlook for Judo Bank shares over the next 12 months.
TradingView data shows that 12 out of 13 analysts have a buy or strong buy rating on the ASX bank stock.
The average $2.13 target price implies a potential 50% upside at the time of writing.
Meanwhile, some are even more bullish and have forecast the shares to increase another 76% to $2.50 by this time next year.
Why are the experts so bullish on the ASX bank stock?
Judo Bank works differently to other ASX bank stocks. The bank has a niche focus in the small and medium enterprises (SME) market, an area which is typically underserved by major banks.
The business provides tailored financial services and lending starting at $250,000 to SMEs with annual turnovers of up to $100 million. It also offers personal term deposit products and home loans.
It also tends to earn higher margins on business loans versus the major banks. For example, for the first half of FY26, Judo reported a net interest margin (NIM) on its business loans of 3.03%, and this is projected to increase to 3.15% in the second half of the financial year. Meanwhile, major lender National Australia Bank, reported a NIM of 1.8% in the same period.
Analysts also like the fact that the ASX bank had a strong start to FY26. In early May, Judo Bank reported strong Q3 lending growth and robust deposit franchise performance. The ASX bank stock also reaffirmed FY26 guidance of $180-$190 million.
The team at Morgans has a buy rating on the SME lender's shares and said it is positive that Judo Bank will deliver strong earnings growth between FY26 and FY28. The broker said its sees recent share price weakness as a buying opportunity for investors.
