Macquarie Group Ltd (ASX: MQG) shares closed the week 0.43% higher at $204.69 apiece on Friday after touching a high of $207.57 in early trade.
This marks a two-year high for the banking giant, which has rallied in a two-wave move off November 2023 lows of $158 per share.
But is it too late to invest? Here's what the experts are saying about Macquarie shares.
Macquarie shares show potential for growth
Despite a recent dip in operating profits, Macquarie's diversified business model continues to impress analysts.
Morgan Stanley, for instance, sees a promising outlook for Macquarie shares, noting the bank's involvement in high-growth sectors like mergers and acquisitions, alternative assets, and private credit.
Analyst Andrei Stadnik predicts 22% earnings growth for FY 2025, driven by a robust market for capital raising and diversified revenue streams.
At its full-year FY 2024 results in May, Macquarie reported a 32% year-over-year decline in earnings per share (EPS) to $9.17. However, the bank still achieved a 13% return on equity (ROE), outperforming the industry's five-year average of 11%, and distributed a dividend of $6.40 per share.
With a projected EPS of $11.18 for FY 2025, Morgan Stanley has set a buy rating on Macquarie shares, setting a price target of $215, a potential $10 per share upside from the current price.
Despite this, the consensus view on Macquarie shares is a hold, according to CommSec. Six analysts rate it a buy, versus six hold and two sell ratings.
Competitive advantage could drive Macquarie shares
Macquarie differentiates itself from other Australian banks through its extensive services in investment, asset management, commodities, and infrastructure.
As I've noted in the past, this broad exposure could provide more recession-proof earnings compared to banks that rely solely on net interest margins (NIMs) and insurance.
The bank's price-to-earnings (P/E) ratio stands at 22 times, suggesting that investors are paying $22 for every $1 of earnings, which excludes dividends.
In return for that price, investors receive a 4.5% earnings yield and 3.15% dividend yield at the time of writing, for a total shareholder yield of 7.65% in owning Macquarie shares today.
Macquarie's strategic investments
Macquarie's real estate arm is also capitalising on the booming land lease sector in Australia, investing in a new platform to develop, own, and operate land lease housing communities.
This move is part of the $2.85 billion raised for its second opportunistic real estate fund, targeting sectors benefiting from demographic trends such as housing shortages and an ageing population.
The bank "will be setting up [its] own platform and is comfortable with the development risk", its head of asset management real estate in Australia told The Australian Financial Review. There's no saying what this means for Macquarie shares just yet, but I think it is worth taking note of.
The broader ASX 200 bank shares context
Macquarie shares aren't the only ASX 200 bank stocks in focus, as many have experienced significant growth over the past six months. For instance, Commonwealth Bank of Australia (ASX: CBA) also recently hit a record high, while National Australia Bank Ltd (ASX: NAB) and Bendigo and Adelaide Bank Ltd (ASX: BEN) reached multi-year peaks.
Despite this, according to my colleague Bron, Goldman Sachs notes that ASX 200 bank shares' valuations are "skewed to the downside" due to compressed NIMs and reduced non-interest income.
Foolish takeaway
The outlook on Macquarie shares remains optimistic. Many experts are positive, given its market position, diversified revenue streams, and strategic investments.
With a potential 10% upside and a strong earnings growth forecast from Morgan Stanley, it may not be too late to invest in Macquarie shares at their current high.
However, past performance is no guarantee of future results, and analyst opinions are just that — opinions. As always, it's wise to conduct your own due diligence.
