Can the Macquarie share price reach $200 again in 2022?

Macquarie shares have had a tough run so far this year.

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Key points

  • Macquarie shares have fallen in recent times on the back of a broader market downturn
  • Trading close to the $220 barrier in early 2022, the company's shares are now fetching $180.49 apiece
  • My tip is it's more than likely Macquarie shares will trade above $200 each in 2022 providing the economic outlook is stable

It has been an interesting year for shareholders in all industries. Market shocks and rebounds have become the norm in 2022.

The Macquarie Group Ltd (ASX: MQG) share price has been no different. It fell as low as $173 in March and is now slightly recovered to $180.49 at yesterday’s market close.

A question I was asked recently was, can the Macquarie share price hit the $200 mark again this year?

Macquarie at a glance

Valued at around $69 billion, Macquarie is Australia’s fifth-largest company on the ASX by market capitalisation.

The company specialises in global banking, financial, advisory, investment, and fund management services.

Over the past few years, Macquarie has further diversified its business model, providing protection against future recessions. Its strong capital position and robust risk management framework has contributed to the company’s 53-year record of unbroken profitability.

Economic outlook

The uncertain economic environment has certainly cast a pall over the Australian banking industry. What were once deemed safe blue-chip shares with reliable dividends have been marred with share price volatility.

Banks tend to do well in times of market hysteria, cashing in on wild price swings. Macquarie has been no different.

In its most recent update to the market earlier this month, Macquarie CEO Shemara Wickramanayake commented:

While many of the regions and markets in which Macquarie operates saw heightened levels of volatility this year, our longstanding strategy to address key areas of unmet need in the community is unchanged.

Over time, this has seen us build deep and differentiated franchises in each of our areas of activity, all of which delivered sound outcomes and strong performance in FY22.

The global powerhouse has continued to maintain a conservative approach to capital, funding, and liquidity. This positions the group to respond to the current environment.

As at 31 March, Macquarie’s cash surplus position stood at $10.7 billion, well above the Australian Prudential Regulation Authority’s strict capital requirements. Macquarie’s CET1 Level 2 ratio stood at 11.5%.

Macquarie’s share price rise?

The global powerhouse has been on the road to recovery following the broader market slump.

The Macquarie share price is up 4.3% since it bottomed out in March, but is sitting below its all-time high of $217.32 achieved in early January.

Interestingly, Macquarie has been steadily growing its earnings per share (EPS) by up to 25% over the last few years. Earnings per share is considered an important tool in understanding the value of a business. It is widely used to track a company’s performance.

Should the company be able to continue this trend, the increased value of the business and the profitability reported should send Macquarie shares higher.

It is a growth trajectory in the works for this banking giant.

Foolish Takeaway

I do believe that the Macquarie share price will reach the $200 mark in 2022.

With the business being so resilient in the face of such challenging conditions and strong capital to back it up, it is just a question of timing.

With more than six months remaining of the calendar year, I believe this milestone will be achieved again soon.

Motley Fool contributor Aaron Teboneras 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 Scott Phillips.

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