Why the Macquarie (ASX:MQG) share price is charging 4% higher

The Macquarie Group Ltd (ASX:MQG) share price is pushing higher today after upgrading its guidance just two weeks after issuing it…

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Macquarie Group Ltd (ASX: MQG) share price has started the week strongly and is pushing higher on Monday.

At the time of writing, the investment bank’s shares are up 4% to $148.39.

Why is the Macquarie share price charging higher?

Investors have been buying Macquarie shares after it upgraded its full year guidance less than two weeks after issuing it.

At its operational briefing on 9 February, management advised that it expects its profit result in FY 2021 to be down slightly year on year. Positively, today, the company revealed that it now expects to achieve profit growth for the full year.

What did Macquarie announce?

According to the release, for the 12 months ending 31 March, Macquarie expects its profits to increase ~5% to ~10% on FY 2020’s results.

Management advised that extreme winter weather conditions in North America have significantly increased short-term client demand for its capabilities in maintaining critical physical supply across the commodity complex and particularly in relation to gas and power.

It explained that Macquarie’s Commodities and Global Markets (CGM) business physically ships gas on the majority of major pipelines across the United States and over time has built capacity to support clients by delivering power and physical commodities to help them meet the unexpected needs of their customers.

However, as before, its short-term outlook is subject to a range of uncertainties. This includes the duration and severity of the COVID-19 pandemic, the uncertain speed of the global economic recovery, and global levels of government support for economies.

Its result will also be subject to the completion of period-end reviews. These include asset impairment and expected credit loss allowances. Though, judging by the Macquarie share price performance, investors don’t appear concerned by these uncertainties.

Macquarie advised that it continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity. It believes this positions it well to respond to the current environment.

Where next for the Macquarie share price?

Positively, the Macquarie share price has been tipped to go even higher from here by one leading broker.

Earlier this month Morgan Stanley put an overweight rating and $160.00 price target on its shares. Though, this price target could soon change to reflect today’s positive update. 

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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