JDO bounced +8.5% on Wednesday as the ceasefire raised hopes the local economy wouldn’t deteriorate as sharply as markets had feared. JDO delivered a solid report in February Here which initially pushed the stock above $2, before concerns around the quality of its new loans came into focus as economic fears soared through March, pushing the stock down 35% below its 2026 high.
Judo is a pure-play Small and Medium-sized Enterprise (SME) lending bank, almost exclusively focused on small and medium-sized business lending in Australia. It primarily funds loans via term deposits and lends to SMEs at higher rates, earning a net interest margin (NIM) from the spread between its funding costs and loan yields. As fuel prices surged following the outbreak of war, small businesses came under pressure, which in turn weighed on Judo (JDO).
Small businesses are clearly under pressure across multiple fronts at present, not just from elevated fuel costs, but we believe much of this is already reflected in JDO’s valuation, particularly following a strong 1H result that delivered +32% half-on-half net income growth. JDO remains a high-quality, niche SME lender, and if both the domestic and global economy stabilise as war-related disruptions and elevated fuel costs ease, the stock should trade meaningfully higher into 2026. Note, this is a stock with a Beta of only ~1.1x but its volatility through March afforded it a mention in today’s report.
- We like JDO below $1.50 believing on valuation grounds alone the risk/reward is attractive.
MM is bullish towards JDO around $145
Add To Hit List
