The Macquarie Group Ltd (ASX: MQG) share price is ending the week on a positive note.
In late trade, the investment bank's shares are up almost 2% to $181.95.
Can the Macquarie share price keep rising?
The good news is that one leading broker sees room for the Macquarie share price to keep rising.
According to a note out of Goldman Sachs, its analysts remain neutral rated but see decent upside ahead of the company's shares with their trimmed price target of $194.03.
Based on the current Macquarie share price, this equates to upside of almost 7%
And that's before dividends. Goldman is forecasting a $5.85 per share dividend in FY 2023. This represents a forward yield of 3.2% and brings its total potential return to ~10%.
What did the broker say?
Goldman was pleased with Macquarie's performance during the first quarter. Particularly given the difficult trading conditions it was facing. It commented:
MQG 1Q23 performance was solid, which despite difficult conditions, was up on a strong pcp with annuity style businesses up significantly and capital markets facing businesses up slightly. That said, management noted conditions did soften during the quarter and did update its divisional guidance, which implied broadly consistent Group NPAT to our previous forecasts.
The broker also believes that the bank's growth outlook is strong. However, due to the company cycling an even stronger period a year earlier, it suspects that Macquarie will still report a decline in profits in FY 2023.
So, with its shares trading at a premium to long term averages, it is sticking with its neutral rating for now. Goldman concludes:
MQG's solid 1Q23 performance combined with yet again higher business capital requirements suggests a strong growth outlook for the group. However, against this, divisional guidance implies FY23 earnings will likely fall, with our forecasts currently down 13%. We highlight that the stock is trading on a 12-month fwd PER of c.16x, which is c.15% above its long-term average of 13.5x, and with the stock offering only 12% [now 7%] upside to our revised TP, we stay Neutral.
