NEWT: Higher 2026 And 2027 Earnings Framework Will Support Future Re Rating Potential

Analysts have nudged their price target for NewtekOne up by $1 to $16.50, pointing to updated views on discount rates, profit margins, revenue trends, and a lower future P/E as key drivers behind the change.

Analyst Commentary

Recent research points to a modest reset in expectations, with the updated $16.50 target reflecting refreshed assumptions on discount rates, profit margins, revenue patterns, and the use of a lower future P/E multiple. Here is how analysts are framing the setup.

Bullish Takeaways

Bullish analysts view the $1 increase in the target price as a sign that the stock’s current valuation leaves room for potential upside relative to their updated long term assumptions.
Adjustments to profit margin assumptions suggest confidence that the business model can still support earnings power that justifies the revised target.
Recalibrated revenue trends are being factored into forecasts in a way that, in their view, still supports a constructive case for long term execution.
Using a lower future P/E while still moving the target higher signals that these analysts see value in the stock even on more conservative multiples.

Bearish Takeaways

Bearish analysts focus on the fact that the target change is small, which they see as a sign that upside could be limited if execution or market conditions do not track current assumptions.
The explicit use of a lower future P/E in the models highlights caution around how much investors might be willing to pay for earnings over time.
Refined views on discount rates suggest sensitivity to funding costs and risk, which could weigh on valuation if conditions become less favorable.
Adjustments to revenue and margin expectations underline that the outlook is being monitored closely, and that any shortfall versus current forecasts could pressure both earnings and the stock’s multiple.

What’s in the News

NewtekOne reaffirmed earnings guidance for 2026, with expected EPS in a range of $2.15 to $2.55, giving investors a current reference point for the company’s profit outlook for that year (Key Developments).
The company introduced earnings guidance for 2027, targeting 10% EPS growth, which implies an EPS range of $2.40 to $2.80 and offers a preliminary view of how management is sizing its earnings ambition beyond 2026 (Key Developments).
NewtekOne entered into a purchase agreement for a private placement of 8.375% notes due 2033 with a principal amount of $15 million and net proceeds of about $14.9 million, providing additional funding through unsecured debt (Key Developments).
The 8.375% note matures on March 1, 2033, pays interest semiannually starting August 1, 2026, and ranks pari passu with the company’s other unsecured unsubordinated debt, which may matter to investors tracking NewtekOne’s capital structure and interest obligations (Key Developments).

Valuation Changes

Fair Value: Target moved slightly lower from $16.75 to $16.50, reflecting updated assumptions across the model.
Discount Rate: Ticked down from 7.35% to 7.31%, indicating a small adjustment to the required return used in the valuation work.
Revenue Growth: Forecast shifted from a 2.24% decline to a 9.37% decline, pointing to a more cautious view on top line trends.
Net Profit Margin: Outlook increased from 21.04% to 28.16%, signaling a meaningfully higher margin assumption despite softer revenue expectations.
Future P/E: Forward multiple moved lower from 9.63x to 8.66x, implying that the updated target relies on a more conservative earnings multiple.

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Key Takeaways

Digital, integrated platform and advanced analytics drive operating efficiency, customer retention, and superior credit risk management for sustainable earnings growth.
Favorable regulatory trends and SME banking shifts provide tailwinds for market share expansion, revenue diversification, and ongoing profitability improvements.
Heavy reliance on government-guaranteed lending, rising competition, and evolving macro risks threaten NewtekOne's margins, revenue growth, and long-term earnings stability.

Catalysts

About NewtekOne

Operates as the bank holding company for Newtek Bank, National Association that provides various business and financial solutions under the Newtek and NewtekOne brands to the small- and medium-sized business market.What are the underlying business or industry changes driving this perspective?

NewtekOne is capitalizing on the expanding pool of small and independent business owners in the U.S., growing its addressable market for lending and financial products-which should support sustained loan origination growth and revenue expansion.
The company's fully digital, branchless online platform and integrated solutions (banking, payments, payroll, lending) increase operating leverage and customer stickiness, driving efficiency ratios down and improving net margins over time.
Active use of advanced technology and proprietary analytics in underwriting and servicing enables superior credit risk management and cost-effective customer acquisition, supporting stable asset quality and bolstering long-term earnings growth.
Regulatory and technological tailwinds (such as support for small business lending and the shift of SMEs away from traditional banks toward specialized, tech-driven lenders like NewtekOne) favor continued market share gains and revenue diversity.
Recent improvements in business deposit growth and lower funding costs through integrated offerings are boosting net interest margins and earnings stability, positioning the company for further profitability improvements.

NewtekOne Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming NewtekOne's revenue will decrease by 9.4% annually over the next 3 years.
Analysts assume that profit margins will increase from 15.7% today to 28.2% in 3 years time.
Analysts expect earnings to reach $82.4 million (and earnings per share of $2.67) by about May 2029, up from $61.5 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 8.7x on those 2029 earnings, up from 6.4x today. This future PE is lower than the current PE for the US Diversified Financial industry at 17.1x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.31%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Heavy reliance on SBA 7(a) and government-guaranteed loans exposes NewtekOne to regulatory or legislative changes that could reduce favorable gain-on-sale margins or origination volumes; recent SBA rule changes already caused the company to lower expected gain-on-sale, directly impacting future revenues and earnings stability.
While NewtekOne touts its digital and technology-first platform, it remains less well-known and may lack the digital scale and brand recognition of larger fintechs or traditional banks, threatening long-term customer acquisition and retention-critical for sustaining loan production and revenue growth.
The rapid expansion of big tech-led, embedded financial services and broader fintech adoption could erode NewtekOne's market share among SMBs, leading to heightened competition, compressed fee/margin structures, and potentially weaker net interest income and net margins over time.
Aggressive growth in complex alternative loan securitizations introduces risk of mispricing or underestimating future credit losses, especially if SMB credit conditions deteriorate or prepayment speeds change, potentially resulting in higher charge-offs and lower net earnings, despite historical charge-off rates currently being low.
Sustained inflation and elevated interest rates could ultimately increase SMB borrowing costs and soften loan demand, while simultaneously pressuring deposit costs (as seen by the need to offer higher-yield accounts); together these trends may squeeze net interest margin and overall earnings power in coming years.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $16.5 for NewtekOne based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $25.0, and the most bearish reporting a price target of just $13.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $292.6 million, earnings will come to $82.4 million, and it would be trading on a PE ratio of 8.7x, assuming you use a discount rate of 7.3%.
Given the current share price of $13.67, the analyst price target of $16.5 is 17.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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