Macquarie shares lift as analysts mull Q1 result
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The news: Analysts retained their ratings and target prices for Macquarie Group, after the the financial group posted a "broadly in line" Q1 result on Thursday.
The numbers: Macquarie added 2.2% to reach $205.98 by 2:55pm AEST, having closed 3.61% lower on Thursday, off the back flat earnings in Q1 and a profit decline for its markets-facing business.
The context: Analysts retained their ratings and target prices on Macquarie following the result, with UBS and Goldman Sachs staying 'neutral' on the stock.
UBS noted the "weaker-than-expected" earnings update. Analysts said Macquarie's operating performance was in line with its expectations, but the group's full-year performance was now more likely to be weighted towards the second half.
Goldman Sachs revised up its 12-month target price from $178.74 to $194.47. Analysts said that while Macquarie's Q1 performance was "soft" compared to their expectations, they remained optimistic on the businesses' medium-term outlook given an "improving macro backdrop". This was along with the group being well-positioned to benefit from the global push towards decarbonisation, further infrastructure investment, and interest rates reaching peak levels.
Morgan Stanley kept its 'overweight' rating while Citi maintained its 'sell' call. Morgan Stanley analysts said that Macquarie's FY25 outlook — incorporating a capital market rebound, and investment income and sales gains predominantly in the second half — "may place near-term pressure on the stock".
Citi said it was "another soft result, that will continue to test investors patience".
"...we are expecting further near-term price weakness given investors had driven the share price to ~two-year highs prior to this announcement," they said. "Investors will be better placed at the 1H25 result in November to assess the potential for a significant 2H25 performance that is now being guided by management."
Meanwhile, Morningstar maintained its fair value estimate of $183 per share, forecasting net profit growth of around 15% in fiscal 2025.
Macquarie management's short-term guidance by division suggests a return to earnings growth in FY25, they said, but is "vague and contingent on market conditions".
The sources: Morningstar research, UBS research, Morgan Stanley research, Goldman Sachs research, Citi research
