Keefe Bruyette has revised its price target for NewtekOne (NEWT, Financial), reducing it from $15 to $13 while maintaining a Market Perform rating. According to an analyst's note, the company is experiencing significant momentum and could potentially capture additional market share. This optimism is fueled by recent modifications in the underwriting requirements set by the Small Business Administration.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for NewtekOne Inc (NEWT, Financial) is $13.84 with a high estimate of $18.70 and a low estimate of $10.00. The average target implies an upside of 39.66% from the current price of $9.91. More detailed estimate data can be found on the NewtekOne Inc (NEWT) Forecast page.
Based on the consensus recommendation from 7 brokerage firms, NewtekOne Inc's (NEWT, Financial) average brokerage recommendation is currently 2.9, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for NewtekOne Inc (NEWT, Financial) in one year is $32.06, suggesting a upside of 223.51% from the current price of $9.91. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the NewtekOne Inc (NEWT) Summary page.
NEWT Key Business Developments
Release Date: May 07, 2025
- Earnings Per Share (EPS): $0.35 diluted, $0.36 basic for Q1 2025.
- Projected Annual EPS: Range of $2.10 to $2.50, with a midpoint growth of 17%.
- Return on Assets (ROA): 1.18% for Q1 2025, compared to an average of 90 basis points for $1-$10 billion banks.
- Net Interest Margin (NIM): Expanded by 24 basis points quarter-over-quarter.
- Net Interest Income: Increased by 56% year-over-year.
- Efficiency Ratio: Declined from 71% to 62% year-over-year.
- Loan Loss Provision: Heavier in Q1 2025, with a focus on planning ahead for potential headwinds.
- Core Deposits: Growth expected, with a shift towards more business deposits.
- Cost of Deposits: Approximately 3.95% in Q1 2025, expected to drift down to 3.8%-3.85% for the full year.
- Pre-Provision Net Revenue (PPNR): $25.2 million for Q1 2025, a 47% increase year-over-year.
- Shareholder Equity Growth: 47% growth from $6.92 in January 2023 to $10.16 in Q1 2025.
- Alternative Loan Program (ALP): Continued growth and success, with a recent securitization yielding a 570 basis points spread.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NewtekOne Inc (NEWT, Financial) reported a strong first quarter 2025 with earnings per share of $0.35, exceeding the consensus estimate of $0.31.
- The company has successfully grown its deposit base and loan portfolio, emphasizing its digital banking model and technology-driven approach.
- NewtekOne Inc (NEWT) has a diversified revenue stream, including a successful securitization of alternative loan programs (ALP) with a 570 basis points spread.
- The company has a strong track record in the SBA loan business, with over two decades of experience and no downgrades in its 13 securitizations.
- NewtekOne Inc (NEWT) has demonstrated significant growth in shareholder equity, increasing by 47% over two years, despite paying a material dividend.
Negative Points
- The market has misunderstood NewtekOne Inc (NEWT)'s business model, leading to a lack of credit for its technological advancements and digital banking strategy.
- The company faces challenges in acquiring attractive credits due to a tougher credit environment, impacting loan volumes.
- There is a significant focus on credit concerns related to the SBA 7(a) loan portfolio, which is a fraction of NewtekOne Inc (NEWT)'s business.
- The CECL reserve accounting is punitive, requiring upfront loss recognition without immediate benefit from the Prime plus three coupon.
- Personnel changes, including the departure of key executives, have raised concerns about stability and continuity within the company.
