Judo Capital Holdings Ltd (ASX: JDO) shares are having a tough year.
Since the start of 2026, the ASX 200 bank stock has lost 20% of its value.
Could this be a buying opportunity? According to analysts at Ord Minnett, the answer is yes.
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What is the broker saying about this ASX 200 bank stock?
Ord Minnett has been looking closely at Judo after the specialist SME lender completed a major note securitisation issue.
The broker highlights that Judo raised $750 million through the issue, which was upsized from $500 million due to strong demand.
This was backed by the ASX 200 bank stock's loans and attracted support from a range of investors, including local and offshore investors, superannuation funds, fixed-income and credit funds, and bank balance-sheet buyers. Ord Minnett said:
Judo Capital (JDO) has solidified its balance sheet via a $750 million note securitisation issue (upsized from $500 million due to strong demand) backed by its loans, sending shares in the lender to small- to medium-sized enterprises (SMEs) up more than 12% on the day.
Pleasingly, the issue was priced at 171 basis points over the one-month bank-bill swap rate. This compares favourably to the 273 basis points margin achieved in Judo's first transaction in September 2023.
Balance sheet concerns eased
One of the key reasons Ord Minnett is positive on the transaction is that it reduces concerns about a potential equity raising.
The broker estimates the securitisation lifts Judo's pro forma common equity tier-one capital ratio to 13.2% at 31 March, compared with its reported CET1 ratio of 12.6%.
It also forecasts a CET1 ratio of 12.6% at 30 June, which it believes is comfortably above the approximate 12% level that investors would view as acceptable.
In addition, Ord Minnett said the strong demand for the issue suggests Judo has opened up a new capital-efficient funding avenue.
While this funding is more expensive than wholesale funding, the broker believes the benefits of releasing regulatory capital and passing credit risk to third-party investors should support higher return on equity over time.
Buy rating retained
According to the note, Ord Minnett has retained its buy rating and $2.40 price target on Judo.
Based on the ASX 200 bank stock's last close price of $1.43, this implies potential upside of almost 70% over the next 12 months.
The broker concludes:
Judo is highly exposed to broader macroeconomic conditions and its performance will be more volatile than most of its larger rivals. It is thus strongly leveraged to any Middle East war resolution and a return to calmer energy markets that had potentially threatened the asset quality of its SME loan book.
We forecast a compound annual growth rate of (CAGR) for EPS of 40% and view Judo as an appealing investment option on a medium-term outlook. This leads Ord Minnett to maintain its target price of $2.40 on Judo and reiterate our Buy recommendation.
