What Happened?
A number of stocks jumped in the afternoon session after the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Regional Banks company Live Oak Bancshares (NYSE: LOB) jumped 7.1%. Is now the time to buy Live Oak Bancshares? Access our full analysis report here, it’s free.
- Regional Banks company Lake City Bank (NASDAQ: LKFN) jumped 5.3%. Is now the time to buy Lake City Bank? Access our full analysis report here, it’s free.
- Regional Banks company Independent Bank (NASDAQ: INDB) jumped 5.6%. Is now the time to buy Independent Bank? Access our full analysis report here, it’s free.
- Regional Banks company Hope Bancorp (NASDAQ: HOPE) jumped 6%. Is now the time to buy Hope Bancorp? Access our full analysis report here, it’s free.
- Regional Banks company Fulton Financial (NASDAQ: FULT) jumped 6.3%. Is now the time to buy Fulton Financial? Access our full analysis report here, it’s free.
Zooming In On Live Oak Bancshares (LOB)
Live Oak Bancshares’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 6.6% on the news that Keefe, Bruyette & Woods upgraded the stock and the company announced it expects to recognize a significant pre-tax gain from a deal involving one of its investments. The analyst firm Keefe, Bruyette & Woods (KBW) raised its rating on Live Oak from Market Perform to Outperform and increased its price target to $43 from $37. KBW cited an expected improvement in credit performance and accelerating revenue trends, projecting high earnings per share growth for 2025 and 2026. Separately, Live Oak announced it anticipates a pre-tax gain of $20 million to $25 million from the acquisition of Apiture, Inc., a company in which it holds an investment. This deal will also stop future pass-through losses. Adding to the positive news, the bank's investment arm, Live Oak Ventures, invested in AI lending platform Cascading AI to help automate its loan processes.
Live Oak Bancshares is down 2.9% since the beginning of the year, and at $37.44 per share, it is trading 25.5% below its 52-week high of $50.22 from October 2024. Investors who bought $1,000 worth of Live Oak Bancshares’s shares 5 years ago would now be looking at an investment worth $1,873.
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