It has been another painful day for shareholders of Judo Capital Holdings Ltd (ASX: JDO) shares.

The ASX bank stock extended its heavy sell-off on Friday morning, falling another 2% to $0.90 after already shedding around 40% over recent trading sessions.

That leaves Judo Capital shares down roughly 49% in 2026 and 42% over the past 12 months. By comparison, the S&P/ASX 200 Index (ASX: XJO) has gained approximately 2.2% over the same period.

So, what’s behind the dramatic collapse?

Investors didn’t like Judo’s latest update

The sell-off began after Judo released revised expectations for FY 2026 on Thursday that left investors questioning the bank’s near-term outlook.

While management still expects earnings to grow this financial year, it also revealed that bad debt costs are rising faster than previously anticipated.

The biggest concern was the bank’s updated cost of risk guidance. Judo now expects its FY 2026 cost of risk to come in between $116 million and $122 million, reflecting an increase in specific loan provisions.

Management of Judo Capital shares said the higher provisioning relates primarily to three individual customer exposures across different industries that have deteriorated following customer-specific developments.

Although the issues appear concentrated rather than widespread, investors rarely welcome surprises when it comes to credit quality.

The bank also expects loans that are either more than 90 days overdue or classified as impaired to rise to around 3% of gross loans and advances by 30 June. That’s another sign that some borrowers are finding conditions increasingly challenging.

There were a few positives

The update wasn’t entirely negative. Judo said its collective provision coverage should remain broadly unchanged from its third-quarter trading update, equating to 94 basis points of gross loans and advances.

Management also noted that current provisioning includes additional overlays designed to protect against ongoing macroeconomic uncertainty across vulnerable sectors.

In other words, Judo Capital believes it has built a reasonable buffer against further deterioration.

Profit growth is still expected, just not as much

Perhaps the biggest disappointment for investors in Judo Capital shares was a downgrade to earnings guidance. Judo now expects FY 2026 profit before tax of between $163 million and $169 million.

While that would still represent approximately 30% growth on FY 2025, it falls well short of the bank’s previous guidance of $180 million to $190 million.

Looking further ahead, management of the $2 billion ASX share expects FY 2027 profit before tax of between $210 million and $220 million, implying another year of roughly 30% earnings growth despite ongoing macroeconomic and geopolitical uncertainty.

Chief Executive officer Chris Bayliss acknowledged the disappointment but maintained confidence in the business. He said the latest update was partly driven by the broader economic backdrop but stressed that Judo Capital remains profitable, well capitalised, and has a clear pathway to delivering a return on equity in the low-to-mid teens.

What’s next for Judo Capital shares?

For now, investors appear focused on rising credit losses rather than future profit growth.

The market has become far less forgiving of banks reporting deteriorating loan quality, particularly when expectations were already high.

That said, Judo’s long-term growth story hasn’t disappeared overnight. The lender continues to grow its business banking franchise, remains profitable, and is forecasting another two years of double-digit earnings growth.

The post What on earth’s going on with Judo Capital shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Ramsay Health Care Ltd (ASX: RHC) shares are edging lower today.

Shares in the S&P/ASX 200 Index (ASX: XJO) healthcare stock closed yesterday trading for $42.74. In late morning trade on Friday, shares are changing hands for $42.65 apiece, down 0.2%.

For some context, the ASX 200 is just about flat at this same time.

Taking a step back, Ramsay Health Care shares have strongly outperformed in 2026, up 23.3% compared to the 0.3% year to date gains posted by the benchmark index.

And the ASX 200 healthcare stock also recently increased its passive income payouts, boosting its fully franked interim dividend by 6.3% to 42.5 cents a share.

Ramsay Health Care stock currently trades on a 1.9% fully franked trailing dividend yield.

And looking ahead, Nathan Hughes, an Australian equities portfolio manager at Perpetual, believes there’s plenty more upside potential for the Aussie-focused healthcare provider (courtesy of The Australian Financial Review).

Here’s why.

Should I buy Ramsay Health Care shares today?

Asked which stock his fund holds that’s most undervalued by the market, Hughes replied, “Ramsay Health Care presents compelling upside.”

He noted, “The negatives, such as labour inflation and changes to private health insurance rebates that may impact industry participation, are now well understood.”

And Ramsay Health Care shares could benefit from their renewed focus on the Aussie market.

According to Hughes:

Beyond the demerger of the Ramsay Santé assets – the European hospitals business Ramsay announced it would spin off in February – we think it’s clear the focus of the company is the core Australian business.

There is significant opportunity to improve operating performance and asset productivity in this division, with a sensible approach to capacity and utilisation in contrast to years of expansion. As such, return on invested capital should improve.

Hughes also pointed to the company’s strong balance sheet and the fully franked dividend on offer as reasons to be optimistic for ongoing share price growth.

He concluded:

Further capital repatriation from offshore is not out of the question in the medium term. This would give the company plenty of financial flexibility, noting Ramsay has a large balance of surplus franking credits.

What’s the latest from the ASX 200 healthcare stock?

Ramsay reported its half year results (H1 FY 2026) on 26 February.

Highlights for the six months to 31 December included underlying earnings before interest and tax (EBIT) of $536.7, up 7.3% year on year.

And on the bottom line, underlying net profit after tax (NPAT) of $171.7 million increased by 8.1%.

Ramsay Health Care shares closed up 10.4% on the day of the results release.

The post Up 23% this year, why Ramsay Health Care shares are tipped for more ‘compelling upside’ appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Recce Pharmaceuticals Ltd (ASX: RCE) shares are being hammered on Friday after the ASX biotech company released an update.

At the time of writing, the Recce share price is down a massive 18.48% to 37.5 cents.

That leaves the ASX healthcare stock down 40% since the start of 2026, wiping out a large chunk of its earlier momentum. However, the stock is still up 25% over the past year.

The latest announcement appears to have rattled investors, raising questions about Recce’s funding needs and whether the market is losing patience.

Recce is developing synthetic anti-infectives designed to address antimicrobial-resistant infections.

The capital raise behind the sell-off

According to the release, Recce has received firm commitments to raise $4 million before costs through an institutional placement.

The company will issue 10 million new shares at 40 cents per share.

The placement price appears to be the sticking point for investors. It is slightly above the current share price, but still well below where Recce shares were trading before the update.

Reece is also launching a share purchase plan (SPP) to raise up to another $4 million. Eligible shareholders can apply for up to $30,000 worth of new shares on the same terms as the placement.

Investors taking part in the placement and SPP will also receive one free attaching option for every two new shares issued. These options will have an exercise price of 60 cents and expire on 30 June 2027.

On top of that, holders who exercise those attaching options will receive two piggyback options, with an exercise price of $1 and an expiry date of 30 June 2028.

Where the money is going

Recce said the funds will be used across several parts of the business.

The cash will help strengthen its balance sheet, support commercial licensing work with a leading Middle Eastern pharmaceutical company, and fund clinical trials.

The company pointed to ongoing work on diabetic foot infections, including a Phase 3 registration trial in Indonesia and another in Australia.

Funds will also go toward activities linked to an Investigational New Drug application with the US Food and Drug Administration (FDA) and Indonesia’s BPOM.

After the offer, Recce expects pro forma cash liquidity of approximately $29.5 million before offer costs.

Can Recce win back investors?

Capital raisings can be very hard for smaller biotech companies, especially when commercial revenue is still limited.

Recce’s market capitalisation is now about $108 million, so a potential $8 million raise is definitely meaningful.

The company now needs to show that this funding can support clinical progress, regulatory work, and commercial deals. 

Until then, it looks like investors are staying on the sidelines.

The post Guess which ASX stock is crashing 18% today appeared first on The Motley Fool Australia.

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• What on earth’s going on with Judo Capital shares?
• Up 23% this year, why Ramsay Health Care shares are tipped for more ‘compelling upside’

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.