Keefe, Bruyette & Woods (KBW) raised its price target for Live Oak Bancshares (NYSE: LOB) to $146.00 from $132.00 on Friday, while affirming an Outperform rating following the release of the bank’s fourth-quarter earnings report. This move follows a positive market response, with Live Oak Bancshares shares advancing approximately 5% during Thursday’s session, attributable to quarterly results surpassing KBW’s already above-consensus forecasts.
The company’s recent stock performance underscores this momentum, having appreciated 8.4% over the preceding week and delivering an impressive 26.2% return over the previous six months. KBW observed that reported gains could have been even more pronounced if Live Oak had not opted to defer certain Small Business Administration (SBA) loan sales to future periods, which influenced the gain-on-sale fees recognized during the quarter.
For the twelve months ending with this quarter, Live Oak Bancshares posted diluted earnings per share of $2.23. Nonetheless, analysis by InvestingPro suggests the stock price currently exceeds its estimated Fair Value. Notably, KBW highlighted steady credit performance during the quarter, addressing stakeholder apprehensions regarding the SBA credit cycle’s stability.
Although KBW retained most earnings and revenue projections for upcoming periods, the firm indicated an expectation that the robust net interest margin observed in the fourth quarter is likely to moderate in the subsequent quarter. This anticipated change correlates with Federal Reserve rate cuts that will impact the company’s floating rate loan portfolio.
Additional financial details from Live Oak’s fourth-quarter 2025 report revealed earnings per share of $0.95, substantially outperforming the consensus estimate of $0.57 – representing a 66.67% earnings surprise. The quarter's revenue totaled $172.91 million, surpassing estimates by 14.27%. These figures collectively reflect a strong operational performance and highlight critical information for investors evaluating the bank’s financial health.
While these developments have attracted the attention of analysts and investors, it is important to consider the cyclical factors and projected interest rate environment that may influence Live Oak Bancshares’ future financial results and stock valuation.