What's the outlook for the Macquarie share price in FY23?

Is it time to be optimistic again about Macquarie's prospects?

| More on:
A young woman sits with her hand to her chin staring off to the side thinking about her investments.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Macquarie had a strong year in FY22 but one broker doesn’t think FY23 will be as good
  • However, both Morgan Stanley and Morgans rate Macquarie as a buy
  • The investment bank is positioned defensively for the current environment

The Macquarie Group Ltd (ASX: MQG) share price has dropped 16% so far in 2022.

However, interestingly, over the past month, Macquarie shares have risen by 9%. Today, they are up just over 1% at $176.68.

Investors may be getting more confident about the company's prospects. But is that growing optimism well-founded?

Let's look at some expert views.

Broker price targets

A price target is the level at which an expert thinks the share price will be in 12 months from the time of that opinion.

As reported by The Australian, the broker Morgan Stanley recently decided to reduce its price target on the business to $218, which implies a possible rise of more than 20%.

The reason for the reduction was that the FY23 first half could be "more challenging" in asset management and investment banking due to the slowdown in economic activity.

However, it predicted that earnings per share (EPS) would fall by 16% on "better commodities, strong long growth, solid demand for infrastructure and renewable energy assets and lower Aussie dollar". It also made small upgrades to its profit expectations in FY24 and FY25.

Even so, the broker is still 'overweight' — which is similar to a buy rating — on the "quality of growth options".

The Australian reported that the broker believes Macquarie will say the FY23 first quarter is down compared to the strong FY22 first quarter. But, the broker suggested this is priced in with the fall of the Macquarie share price.

After the FY22 result, the broker Morgans upgraded its rating to add with a price target of $215 after a good performance in Macquarie Capital and commodities and global markets (CGM). It increased its earnings expectations for FY23 and said the FY22 result was essentially strong all around.

Macquarie share price valuation

Morgans is expecting more profit from Macquarie than Morgan Stanley. The Morgans profit estimate puts the Macquarie share price at under 16x FY23's estimated earnings.

Morgan Stanley's projection for FY23 puts the Macquarie share price at more than 17x FY23's estimated earnings.

Outlook comments

While warning of a number of potential factors that could impact its FY23 performance, such as market conditions, global inflation and geopolitical events, Macquarie said that it continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity, which it said positions it well in the current environment.

Macquarie managing director and CEO Shemara Wikramanayake said:

Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets, strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions, an ongoing program to identify cost-saving initiatives and efficiency, a strong and conservative balance sheet, and a proven risk management framework and culture.

Despite all of the volatility over the past year, Macquarie shares are up 12% over the last 12 months.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Financial Shares

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Financial Shares

2 rising ASX financial shares with 'meaningful upside' still left: fundie

Financials outperformed every other sector in FY25, but there are still buying opportunities left, say these experts.

Read more »

Frustrated and shocked business woman reading bad news online from phone.
Financial Shares

Macquarie shares sink 5% on Q1 update

The investment bank is having a tough start to the year.

Read more »

A man holds his baby on his lap at the dining room table while he looks at his laptop screen earnestly.
Financial Shares

After its result, does Macquarie rate AMP shares a buy, hold or sell?

The financial services company released a strong second-quarter update on Monday.

Read more »

A blockchain investor sits at his desk with a laptop computer open and a phone checking information from a booklet in a home office setting.
Broker Notes

Are non-bank lenders a lucrative alternative to the big 4 banks?

The big 4 banks are widely perceived as being fully valued or overvalued.

Read more »

Red sell button on an Apple keyboard.
Financial Shares

ASX 200 financials was the best sector of FY25. But it's time to sell these 2 stocks, say experts

The ASX 200 financials sector gave investors a near-30% total return in the 2025 financial year.

Read more »

Happy woman working on a laptop.
Financial Shares

AMP share price jumps on strong Q2 update

Let's see what the financial services company reported for the quarter.

Read more »

A woman holds up hands to compare two things with question marks above her hands.
Financial Shares

The pros and cons of buying IAG shares this month

Is this the right time to invest in the insurance giant?

Read more »

man analysing share price
Financial Shares

ASX 200 financial services rivalry: Should I buy Hub24 or Netwealth shares?

Let's compare the pair.

Read more »