Capping off a tremendous year on the chart, shares in Macquarie Group Ltd (ASX: MQG) are in hot focus for investors as we ease into the first quarter of 2022.
Although the S&P/ASX 200 Financials Index (XFJ) has slipped less than 1% in the red over the last week of trading, it remains up 3% for the month. Macquarie has lagged the broad index in that time and is up just 1.5% at the time of writing.
Macquarie nudged past several milestones last year. For instance, it eclipsed the illustrious $200 per share mark in October and has since climbed more than $5 per share to today’s session.
This momentum permeated an impressive hallmark for the bank, positioning it as the 4th largest bank in Australia by market cap.
Macquarie now replaces ANZ in the notorious “big 4 of banking” group that has held the mantlepiece for all these years.
And with several of the banking majors facing stress both in operations and on stock prices already this year, it begs the question – could Macquarie become Australia’s second-biggest bank in 2022? Here’s what the experts think.
What’s in store for Macquarie in 2022?
Fundies are constructive on the Macquarie share price too. The bank is a core holding across several managed accounts.
For instance, Medallion Financial managing director Michael Wayne previously told Tony Yoo of The Motley Fool that his team continues to hold Macquarie shares for many clients.
Although, Wayne also reckons that “It is hard to be a buyer at these levels, and our preference would be to buy after a decent pullback”.
Perennial Value Management’s Stephen Bruce also told The Motley Fool that Macquarie is one holding that the firm would keep for many years into the future.
“If you continue on with the green and energy transition theme, Macquarie largely invented it”, Bruce says when estimating what Macquarie’s outlook might be in 4 years time.
Citi is also bullish on Macquarie and values the bank at $226 per share. The firm was unfazed by Macquarie’s recent share purchase plan (SPP) that garnered considerable open interest from shareholders.
Macquarie will accept the SPP applications in full, and “expects to issue approximately 6.8 million fully paid shares for $1.3 billion” says Citi.
Meanwhile, each of JP Morgan, Morgan Stanley and Jefferies reckon Macquarie is a buy right now. In fact, in a list of analysts covering the bank provided by Bloomberg Intelligence, 61.5% of coverage has it as a buy whereas just 1 firm advocates to sell.
Could it reach the number two spot?
In terms of market capitalisation, Macquarie is the ‘smallest’ entrant into the big 4 group at a fully diluted market value of $78 billion.
Commonwealth Bank of Australia (ASX: CBA) closes out the group on a $173.6 billion market capitalisation and therefore holds the top spot.
Macquarie would therefore need to surpass National Australia Bank Ltd. (ASX: NAB)’s market value of circa $95 billion to claim the silver medal.
Macquarie has more than 353 million basic shares outstanding and a fully diluted share count of 381.4 million shares.
As such, using some back of the envelope calculations, Macquarie would need to trade at $249 per share in order to surpass NAB in terms of market capitalisation and take second place, according to those stipulations.
With a 12-month price target of $212 per share, the bank might find some difficulties getting there, but time and market mechanics will certainly tell.
Either that or the NAB share price needs to take a big step backwards and trade well below its current levels for the same outcome.
In the last 12 months, the Macquarie share price has soared to new peaks and climbed more than 50% in that time. In the past month, it is up more than 3% and has started the year in the green as well.