Judo Capital Holdings' (ASX:JDO) amended guidance still implies it will deliver around 30% pre-provision operating profit (PPOP) compound annual growth rate over the two years to fiscal 2027, at a three times PPOP multiple and a 40% discount to net tangible assets, Jefferies said in a Thursday note.

Judo said it now expects a fiscal 2026 profit before tax of AU$163 million to AU$169 million. The cut comes as Judo now expects its fiscal year cost of risk to be in the range of AU$116 million to AU$122 million, reflecting an increase in certain provisions.

However, questions remain around Judo's asset quality and risk settings.

Its stronger second half net interest margin appears largely due to more favorable funding conditions. Blended deposit costs were 62 basis points in April and May, and while new term deposit spreads were higher at 76 basis points, they remain below the through-the-cycle range of 80 basis points to 90 basis points.

Its front book and blended lending margins were stable at 4.2% in April and May, while its AAA lending pipeline was slightly higher at 4.3%.

The investment firm retained its buy rating but cut the price target to AU$1.64 from AU$2.32.

Judo Capital's shares were down 2% in recent Friday trade.