Top Broker Gives Verdict on Macquarie Stock Price (ASX: MQG)

Image source: Getty Images

The Macquarie Group Ltd. The stock price (ASX: MQG) performed very well on Thursday after the release of a trading update.

Shares of the investment bank rose as much as 7% at one point to a record high of $ 182.66.

Macquarie’s stock price ultimately ended the day up 4.5% to $ 179.13.

Can the Macquarie share price continue to rise?

A leading broker has delivered its verdict on the Macquarie share price. And if he is a fan of the company, he is unfortunately not a fan of its valuation.

According to a note from Goldman Sachs, its analysts kept their neutral rating and raised their price target 9% to $ 170.62.

Based on the current Macquarie share price, that implies a potential drop of almost 5% over the next 12 months.

What did the broker say?

Goldman was happy with Macquarie’s business update and improved its earnings estimates to reflect a significantly better-than-expected start to fiscal 2022.

He commented, “MQG has provided updated guidance where it now expects the NPAT 1S22 to be slightly lower than the 2S21. We consider this to mean a decrease of around 5% and note that compared to the previous GSe of 1H22 NPAT down 17%.

However, this is not enough for a more bullish note for valuation reasons.

Goldman explained, “The earnings upgrade cycle continues for MQG and since the May 20 low, its 12-month EPS is up 52% ​​and is within 2% of its April 19 peak. However, since April 19, its share price is almost a third higher. Therefore, with MQG currently trading a 12-month forward P / E of 20.5x, with incremental earnings upgrades still largely coming from investment income and trading, we remain neutral. We also point out that our revised TP offers -2% 12 month TSR.

Overall, the broker seems to believe that the Macquarie stock price may have peaked at this time. It might be worth looking elsewhere in the area.

Leave a Reply

Your email address will not be published.