The Macquarie Group Ltd (ASX: MQG) share price is moving higher in morning trading today. Shares are currently changing hands at $188.47, a gain of 3.06%.
That marks a record high for Macquarie, whose shares have been on an extended bull run this past year.
What’s more, the banking giant has achieved this growth on its price chart in the absence of any market-sensitive news over the last month.
What’s fuelling the Macquarie share price lately?
The Macquarie share price began gaining ground last month after the company released an update on its near and medium-term outlook at the Jeffries Asia Forum.
Although it sees some meaningful headwinds in the short-term, looking further out, the company feels it is well-positioned to “deliver superior performance in the medium term”.
The news appeared important enough for investors to start bidding up the Macquarie share price, baking in its future earnings expectations to value the bank’s equity.
Momentum from the wider industry is also apparent in Macquarie’s case, with the S&P/ASX 200 Financials index (ASX: XFJ) also climbing into the green this past month.
However, Macquarie is leading the broad ASX financials index by a country mile, and there may be some other factors at play here – especially with its entrance into the green energy and renewables sector.
That’s what two leading brokers reckon anyhow, after their analysis on the company and its share price.
Can Macquarie keep gaining past its record high?
Analysts at investment banking giants JP Morgan and Morgan Stanley certainly believe so, particularly given their Australian counterpart’s moves into ‘green capabilities’.
Morgan Stanley’s analysts rate Macquarie as having one of the best ‘green’ mantras among listed financial companies worldwide.
As a result, it reckons Macquarie is about to have a period of accelerated earnings growth versus its peers, and that it should therefore command a “green premium” on its valuation multiples.
Morgan Stanley thinks Macquarie can grow its green revenue by 20-25% annually over the coming 5-year period.
The broker arrives at these conclusions from its own analysis, as it thinks “Macquarie’s critical scale in renewables should command a further green premium and reduce its cost of capital”.
As such, it raised its price target by 37% to $240, implying around 27% upside potential on today’s pricing.
Fellow market maker JP Morgan has also offered its opinion on the Macquarie share price.
The broker has a $190 price target on Macquarie shares and maintains its overweight rating to investors.
It too believes the bank can deliver high earnings growth, forecasting approximately 15% net profit after tax in FY22, and 15% return on equity from FY22–24 for the company.
Looking further ahead, it sees “the annuity divisions driving strong medium-growth, with MAM (Macquarie Asset Management) well placed to benefit from structural demand for alternative asset classes”.
It also feels Macquarie Investment Management will benefit from the acquisition of Waddell & Reed completed in FY21.
In any sense, both brokers are bullish on Macquarie shares and believe they have the legs to extend the bank’s run into the green much further into the future.
The Macquarie share price is up 34% this year to date and 41% in the past 12 months.