Macquarie shares fall after brokers cut estimates and downgrade valuations

Analysts weren't overly impressed with this investment bank's results.

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Macquarie Group Ltd (ASX: MQG) shares are having a subdued start to the week.

In morning trade, the investment bank's shares are down almost 1% to $161.86.

Why are Macquarie shares falling?

The weakness in the Macquarie share price on Monday appears to have been driven by a poor reaction to last week's half-year results by brokers.

While analysts haven't downgraded the ratings they have on the bank's shares, they have taken an axe to their valuations.

For example, according to a note out of Goldman Sachs, it has retained its neutral rating and cut its price target to $180.80 (from $194.99).

Its analysts are now expecting Macquarie's profits to fall by almost a third in FY 2024. This will be below consensus estimates. It said:

Our FY24E NPAT forecast sits 4% below where management expected consensus to move to post this result (A$3.7-3.9 bn). This would appear to reflect our more negative view around MAM's net profit contribution, where management's qualitative revenue guidance would appear to require a material improvement in the division's 2H24 cost trajectory to hit management's Group NPAT expectations.

Over at Citi, its analysts have retained their neutral rating with a reduced price target of $161.00 (from $175.00). The broker was very surprised with the way the market responded to its result last week. It said:

There was plenty of detail in the result, yet we thought what was most extraordinary was the positive share price reaction (+0.6% vs market) despite the headline miss and likely negative consensus revisions. At a base level, this tells us that the market was pricing in the earnings miss.

Elsewhere, analysts at Morgans have retained their add rating but cut their price target to $182.80 (from $194.41) and Morgan Stanley has retained its overweight rating with a new price target of $202 (from $215).

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. 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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