The Macquarie Group Ltd (ASX: MQG) share price has dropped 16% so far in 2022.
However, interestingly, over the past month, Macquarie shares have risen by 9%. Today, they are up just over 1% at $176.68.
Investors may be getting more confident about the company's prospects. But is that growing optimism well-founded?
Let's look at some expert views.
Broker price targets
A price target is the level at which an expert thinks the share price will be in 12 months from the time of that opinion.
As reported by The Australian, the broker Morgan Stanley recently decided to reduce its price target on the business to $218, which implies a possible rise of more than 20%.
The reason for the reduction was that the FY23 first half could be "more challenging" in asset management and investment banking due to the slowdown in economic activity.
However, it predicted that earnings per share (EPS) would fall by 16% on "better commodities, strong long growth, solid demand for infrastructure and renewable energy assets and lower Aussie dollar". It also made small upgrades to its profit expectations in FY24 and FY25.
Even so, the broker is still 'overweight' — which is similar to a buy rating — on the "quality of growth options".
The Australian reported that the broker believes Macquarie will say the FY23 first quarter is down compared to the strong FY22 first quarter. But, the broker suggested this is priced in with the fall of the Macquarie share price.
After the FY22 result, the broker Morgans upgraded its rating to add with a price target of $215 after a good performance in Macquarie Capital and commodities and global markets (CGM). It increased its earnings expectations for FY23 and said the FY22 result was essentially strong all around.
Macquarie share price valuation
Morgans is expecting more profit from Macquarie than Morgan Stanley. The Morgans profit estimate puts the Macquarie share price at under 16x FY23's estimated earnings.
Morgan Stanley's projection for FY23 puts the Macquarie share price at more than 17x FY23's estimated earnings.
Outlook comments
While warning of a number of potential factors that could impact its FY23 performance, such as market conditions, global inflation and geopolitical events, Macquarie said that it continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity, which it said positions it well in the current environment.
Macquarie managing director and CEO Shemara Wikramanayake said:
Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets, strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions, an ongoing program to identify cost-saving initiatives and efficiency, a strong and conservative balance sheet, and a proven risk management framework and culture.
Despite all of the volatility over the past year, Macquarie shares are up 12% over the last 12 months.
