Macquarie Group Ltd (ASX:APT) has seen strong growth over the past 12 months, gaining 41.77%. Macquarie Group is strategically split into four main businesses, these include asset management, Banking and Financial Services, Commodities and Capital segments. The company currently boasts a market cap of $57 Billion and a steady 5 Year Beta of 1.15. In Macquarie’s most recent earnings release, the company noted just over $3 Billion in net profit, up 10% YOY. In addition, the company noted a 7% YOY improvement in its EPS and a 9% increase in its annual dividend. With strong annual results, this article will breakdown everything investors need to know about Macquarie Bank stock.
Table of contents
What are analysts saying about MQG stock?
Across the board of 13 analysts, the average 12 month price target for MQG stock is $163.39 a share. The highest price target is $184 a share whilst the low end targets are as low as $125 a share. The average target illustrates a 5% upside from the current trading price. The general consensus amongst analysts is bullish, with 7 Buy ratings according to Wallstreet Journal Data.
Amongst analysts, Morgan Stanley recently upgraded their rating on MQG stock to overweight with a 12 month price target of $175 a share. Morgan Stanley analysts noted they expect the companies Capital and Banking business to outperform in FY 22. In comparison, Citi reiterated their Sell rating on the stock after earnings, with a price target of $140 a share.
How is Macquarie Group financially performing?
In Macquarie’s most recent earnings release, the company noted a net profit of $3.015 Billion, a 10% improvement YOY. Interestingly, 68% of the companies income was generated overseas. If we break this down further to Macquarie’s core business operations, its commodity business grew the most (50% YOY). In addition to positive revenue growth, the company also noted a cash position of $18.425 Billion (cash on balance sheet). This is almost double its cash position in the previous year. The strong financial performance saw a 9% increase in the companies dividend, a green light for long term investors.
“Our performance has been resilient, and our operating and support groups have remained busy supporting our clients, partners and communities, as well as our own team.”Peter Warne, Independent Chairman of Macquarie Group
Outlook for Macquarie Bank (ASX:MQG) stock
Firstly, the company expects “Improved transaction activity” in their Capital business in 2021, alongside “Improved outlook for investment realisations”. Macquarie noted in an investor presentation that they are taking a conservative approach to “capital, funding and liquidity” which allows for greater positioning in the current market environment. This is important if we consider the implications of global market changes as 68% of revenue was generated overseas last year.
Investors do have concerns surrounding American revenues with the potential of increased US corporate tax rates under the Biden administration. Analysts from Citi did also raise this concern, alongside the potential for higher interest rates in the near future. These offshore risks may place MQG stock under pressure in the near future and is something investors will need to be aware of.
In summary, Macquarie Bank (ASX:MQG) has shown strong resilience with their FY 21 earnings results. In addition, the slight upside from analysts price targets does suggest analysts can see room for growth in 2021/22. However, it is important for investors to understand the offshore risks MQG stock could face over the mid term period.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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