Can the Macquarie (ASX:MQG) share price hit $240 by Christmas?

One broker believes ‘green’ factors could spark a rise in the global investment bank’s shares

| More on:
Close-up photo of man's hands holding silver platter with coins and young plant growing out of pile of money

Image source: Getty Images

Could the Macquarie Group Ltd (ASX: MQG) share price reach $240 by the time Christmas rolls around?

There is a broker out there that currently has that $240 price target on Macquarie.

It’s the analysts at Morgan Stanley that rate the business as a buy with the hefty target. However, it’s important to remember that a broker price target is where they believe the business will be trading 12 months from now, not just by Christmas.

Why is Morgan Stanley so bullish on the Macquarie share price?

Over the last year, the Macquarie share price has already gone up by around 40%.

But the broker is expecting that the global investment bank can go up another 20%.

A key reason for the bullish sentiment about Macquarie by Morgan Stanley relates to the ‘green’ exposure the investment bank has and how that could be a strong growth runway for the company.

Last month, the global investment bank gave a profit update for the market. In that, it said it was expecting its FY22 first-half profit to be slightly down on the second half of FY21. But that actually represents a material increase in profit year on year compared to the first half of FY21.

Green exposure

In that profit update, Macquarie outlined a number of green factors.

Relating to climate change, it said it has financed emissions aligned to net-zero by 2050. It has invested A$6.64 in renewable energy for every A$1 invested in ‘conventional’ energy. The goal is for Macquarie Asset Management’s portfolio to be net-zero by 2040.

Macquarie says it has 30 GW of green energy assets in development as of 31 March 2021. It had 14 GW of green energy assets in operation or under management on 31 March 2021.

Talking about Macquarie’s direct operations, it is on track for net-zero by 2025. It says it has been carbon neutral since 2010. The investment bank said it’s targeting 100% renewable electricity by 2025. Emissions per capita have reduced by 71% from FY20.

The market-facing business Macquarie Capital is playing its part in making a profit and helping the world become greener with renewable energy projects and the supply of green energy solutions to corporate clients.

But one of the key operating groups within Macquarie is the Green Investment Group (GIG), described as one of the leading renewable energy developers and investors in the world. It has more than $2 billion of current commitments, with more than 250 projects in development and construction. GIG also has over $45 billion of committed and arranged money to support green energy projects.

What is the earnings estimate valuation on the Macquarie share price?

Morgan Stanley is expecting profit growth from the investment bank over the next couple of years.

Based on that, the broker thinks the Macquarie share price is valued at 21x FY22’s estimated earnings and 19x FY23’s estimated earnings.

Should you invest $1,000 in Macquarie right now?

Before you consider Macquarie, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Macquarie wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

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 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.

More on Financial Shares