Morgan Stanley downgrades Macquarie, predicts revenue dip
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The news: Morgan Stanley has downgraded its rating on financial services giant Macquarie Group, expecting revenue to hit five-year lows on the back of a delayed recovery in global capital markets.
The numbers: Morgan Stanley moved its rating on Macquarie from 'overweight' to 'equal-weight' and cut its price target from $224 to $191.
Macquarie shares were last trading roughly flat at $179.11, having opened 2.5% lower.
Morgan Stanley cut its forecast for fiscal 2026 by 9%, expecting Macquarie's "lumpy" revenue to reach five-year lows in FY25 and FY26 before recovering in FY27. Its analysts expect FY25 revenue of $1.8 billion, down from $2 billion in FY24, before recovering to $2.6 billion in FY27 — still well below its peak of $3.3 billion in FY22.
The context: The analysts noted that several of Macquarie's best growth levers will be unavailable in the next financial year because of delayed capital market recovery and "underwhelming" renewable asset sales.
Morgan Stanley has pushed its expectations for a capital markets recovery to 2028 following the "sharp rise in volatility" in April. However, its analysts noted that Macquarie's real assets, such as real estate and infrastructure, could see improved demand as replacement values rise with tariff inflation.
The source: Morgan Stanley research
