Why this broker tips the Macquarie share price to clip $227 this year

Sentiment has remained positive on Macquarie amid recent volatility.

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Key points

  • Macquarie shares have clawed back gains in recent months to drive through market volatility 
  • One broker is positive on the bank and tips its share price to rise another 10% this year 
  • In the last 12 months, the Macquarie share price has climbed 32% 

Shares in Macquarie Group Ltd (ASX: MQG) have leapt higher in recent weeks to trade at $206.67 before the open on Thursday.

After a rough period of volatility, the investment bank has clawed back gains and is now tracking towards its 52-week high of $215.

TradingView Chart

Can Macquarie’s share price run higher?

One broker has priced in roughly 10% more upside for Macquarie shares this year. JP Morgan values the bank at $227 per share, after revising its price target up from $223 per share in a recent note.

“[Macquarie’s] guidance for commodities income to be “significantly up on FY21″ was given prior to the recent spike in energy prices,” the broker shared.

“Since then, international events have contributed to much higher natural gas price volatility, which should provide strong support to trading income.”

As such it now projects the bank’s commodities income to spike 27% in FY22 to $3.4 billion, with a slight drop to $2.6 billion the following year.

All-in-all, the broker tips FY22 to be a bolster year for Macquarie, locking in tidy profits if all goes according to plan.

Recent acquisitions and structural demand for alternative investments are also catalysts for Macquarie’s various operating segments, it says.

“Growth should be supported by significant deployment of capital into all operating divisions given a healthy capital surplus,” analysts added.

“We still see modest upside to our valuation, particularly given our forecast of >15% Return on Equity (ROE) in FY22-24′”.

At $227 per share JP Morgan’s valuation rests above the consensus price target for Macquarie of $220.54, but Jefferies and Morgan Stanley both value the bank at $245 per share, according to Bloomberg data.

In the last 12 months, the Macquarie share price has climbed 32% and is up 6% this past month.

Motley Fool contributor Zach Bristow 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 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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