The Macquarie Group Ltd (ASX: MQG) share price is edging lower on Monday afternoon.
At the time of writing, the investment bank's shares are down 0.1% to $174.06.
This compares to a gain of 0.2% by the S&P/ASX 200 Index (ASX: XJO) today.
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Why is the Macquarie share price underperforming?
The weakness in the Macquarie share price on Monday could have been driven partly by a broker note out of Citi last week.
According to the note, in response to its trading update, the broker has retained its sell rating but lifted its price target on the company's shares to $153.00.
Based on the current Macquarie share price, this implies potential downside of 12% over the next 12 months.
What did the broker say?
Citi was pleased with the investment bank's trading update, which revealed that Macquarie expects its first half profit in FY 2022 to be "slightly down" over the second half of FY 2021.
The broker believes this implies a first half net profit in the range of $1.8 billion to $2 billion. This was materially ahead of the consensus estimate of $1.55 billion.
Citi has upgraded its estimates and is now expecting a net profit of $1.9 billion for the half. However, this isn't enough for a more positive rating. This is due to its belief that the Macquarie share price is expensive at the current level.
It commented: "We now forecast $1.9bn for 1H22, with commodities and MacCap gains tracking better than our expectations, despite the negative timing of storage & transport revenue. We see a moderation in earnings in 2H22 as MQG cycles the UK meters gain on sale; and buoyant capital markets activities starts to cycle."
"The stock has reacted positively to the guidance upgrade (+5%), but consensus is largely upgrading on the back of one-time MIC wind-down revenues. At 22x FY23 earnings the stock remains expensive in our view," the broker concluded.
