This expert tips 25% upside for the Macquarie share price

Macquarie could be a bank share to buy according to Morgans…

| More on:
A man in a suit smiles at the yellow piggy bank he holds in his hand.

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

The Macquarie Group Ltd (ASX: MQG) share price is trading lower with the market on Wednesday afternoon.

At the time of writing, the investment bank's shares are down over 1% to $170.90.

This means the Macquarie share price is now down almost 20% since the start of the year.

Is the Macquarie share price in the buy zone now?

One leading broker that sees plenty of value in the Macquarie share price is Morgans.

According to a recent note, the broker has an add rating and $215.00 price target on the company's shares.

This implies potential upside of almost 26% for investors over the next 12 months. And that's before dividends!

Morgans is expecting a partially franked $7.07 per share dividend in FY 2023. This equates to a 4.1% dividend yield, which stretches the total potential return to a very attractive 30%.

Why is it bullish?

The note reveals that Morgans is bullish on the investment bank due to its exposure to a number of long term structural growth areas and its ongoing market share gains in Australian mortgages.

Its analysts explained:

We continue to like MQG's exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while it continues to gain market share in Australian mortgages.

And while the broker acknowledges that it will be hard for Macquarie to cycle FY 2022's impressive performance, it thinks investors should look beyond this and focus on the future.

In our view, it was hard to fault MQG's FY22 result, which benefitted from strong performances in CGM and Macquarie Capital. The only real negative, in our view, is it will be difficult for MQG to cycle such a standout performance in FY23. We anticipate some near-term earnings volatility over FY23 but we like MQG's favourable longer-term growth profile and consistent history of delivering strong returns (~15% average ROE over time).

Motley Fool contributor James Mickleboro 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 Bank Shares

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

CBA shares are now worth a total of more than $300 billion. Here's why that's a problem

CBA’s ever growing stock market dominance is raising red flags. But why?

Read more »

An excited man stretches his arms out above his head as he reaches a mountain peak.
Record Highs

Breaking: CBA shares hit a new record of $180

CBA shares can't possibly keep rising can they?

Read more »

A small child in a judo outfit with a green belt strikes a martial arts pose with his hand thrust forward.
Bank Shares

Forget the big 4 banks, Macquarie tips 11% upside for this ASX All Ords Financials stock

This broker is telling investors to look beyond CBA.

Read more »

View of a business man's hand passing a $100 note to another with a bank in the background.
Bank Shares

What price should I pay for the Big 4 banks?

Macquarie has updated its target price on Australia’s Big 4 banks.

Read more »

Bank building with word Bank on it.
Bank Shares

What happened with the big four ASX 200 bank stocks in May?

Guess which ASX 200 bank stock led the charge higher again in May.

Read more »

An ASX investor in a business shirt and tie looks at his computer screen and scratches his head with one hand wondering if he should buy ASX shares yet
Bank Shares

After the recent RBA rate cut, why is Macquarie underweight ASX bank shares?

Macquarie is not banking on strong returns from this sector.

Read more »

Business people discussing project on digital tablet.
Bank Shares

CBA vs Macquarie shares: Which one is best?

Ord Minnett has given its verdict on these giants.

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Bank Shares

How the CBA share price smashed the benchmark to close May at all-time highs

I hope you didn’t sell your CBA shares in April!

Read more »