Macquarie Group Ltd (ASX: MQG) shares are having a tough day on Thursday.
In afternoon trade, the investment bank's shares are down 3% to $157.25.
This leaves the Macquarie share price trading within sight of a 52-week low.
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Will Macquarie's shares rebound?
Whether or not the Macquarie share price rebounds in the near future may depend a lot on how strong (or weak) the company's half-year results are next week.
Macquarie is scheduled to release its numbers on Friday 28 October and a sizeable sequential decline in profits is being forecast by the market.
Let's take a look at what the market is expecting.
What is the market expecting?
According to a note out of Goldman Sachs, its analysts are expecting Macquarie to report a cash net profit after tax of $2,183 million. This is a touch higher than the market consensus estimate of $2,157 million.
While Goldman's cash earnings estimate represents a 7% increase on the prior corresponding period, it will be an 18% decline on the previous half.
Its analysts are expecting this to lead to an interim dividend of $2.55 per share, down 6% on the prior corresponding period. Though, it is worth noting that the market consensus estimate is for a much higher dividend of $2.94 per share.
What did Goldman say?
Goldman has suggested that investors keep a close eye on the Commodities and Global Markets (CGM) business.
That's because when Macquarie released its first-quarter update, it was expecting a soft first-half performance from the business due to lower commodities trading income. However, Goldman highlights that trading conditions have improved markedly since then, which could result in a stronger-than-expected first-half performance from the business.
It explained:
At the 1Q23 update, MQG guided for Commodities trading income within CGM to be down following a strong FY22 (vs. previous guidance of significantly down), albeit volatility may create opportunities.
Given that now nearly two-thirds of the division's revenues are sourced from Commodities trading income, and within this, the majority of revenues have recently been sourced from Risk Management and Inventory Management and Trading, we believe the backdrop of volatile commodity markets should have provided a notable tailwind in 2Q23.
As such we forecast profit contribution from CGM to rise 14% hoh and within this, for Commodities trading income to be up +20%. We will be keen to get an update on whether these volatile markets have indeed translated to profitability and what MQG's expectations are going forward.
Are Macquarie's shares good value?
While Goldman is sitting on the fence with its recommendation, it still sees plenty of upside for Macquarie's shares.
The note reveals that the broker has put a neutral rating and $184.58 price target on its shares. This suggests potential upside of 17% for investors.
