Leading research house upgrades Magellan share price rating

Magellan Financial Group Ltd (ASX: MFG): buy, hold, sell?

| More on:
a woman

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

If you include dividends the Magellan Financial Group Ltd (ASX: MFG) share price is up 100% over just the past year to $53.14 today, but a lot of professional research analysts believe the stock's value may of got ahead of itself.

According to MarketScreener the median share price valuation among 11 analysts is $47.10. However, it's worth noting that median price targets and the like can reflect old news or be outdated with total funds under management and investment performance at Magellan varying on a daily basis. 

According to financial news wires one of Australia's most famous investment banks and research houses has lifted its rating on Magellan shares to neutral with a $50 price target. That's actually quite bullish though compared to the analysts at Goldman Sachs who have a $39.52 price target on the business.

Goldman's is forecasting Magellan will pay total dividends of $1.93 on adjusted earnings per share of $2.145 over fiscal 2020.

This looks a little light on to me given Magellan is well positioned to deliver another strong half of underlying profit growth to December 31 2019. 

If we assume Goldman's is on the money with its forecasts Magellan shares sell for 24.8x fiscal 2020's earnings per share with a fully franked 3.63% dividend yield. 

Of course where final earnings and dividends land will depend greatly on performance fees and the known unknown of how US equity markets in particular perform out to June 30, 2020. 

Therefore we can see that even short-term forecasting is a hazardous business and as an investor it might be best to focus on the underlying quality of a business before 12-month price targets. 

Other fund managers currently performing well for investors include VGI Partners Ltd (ASX: VGI) and Pinnacle Investment Management Group Ltd (ASX: PNI).

Motley Fool contributor Tom Richardson owns shares of Magellan Financial Group.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »