Macquarie Group Ltd (ASX: MQG) shares are due to close the session on Friday at another high after shares hit $233 apiece near the open.
They have since slid back to trade at $232.25 per share at the time of writing. If the bank finishes trading at or above this level, it will represent its highest-ever closing price.
As the market watches the price levels closely, the bigger question on many investors' minds is: Are Macquarie shares still a good buy at these elevated levels? Let's see what the experts think.
A five-year view of the stock is seen in the chart below.
What's pushing Macquarie shares to record highs?
Macquarie shares have been strong this year and jumped 26% year to date.
The most recent driver was the $24 billion sale of data centre giant AirTrunk. This was a major win for Macquarie.
Initially investing in AirTrunk at a $3 billion valuation four years ago, the company's combined stake with PSP Investments stood at 88% by the time of the sale.
Macquarie has also been increasing its presence in the mortgage market, with its banking and financial services division growing its loan book rapidly.
In July, Macquarie grew its mortgage book by 1.6%, significantly faster than the industry average, pushing its market share to 5.5%.
Long-term growth prospects
Analysts are bullish on Macquarie's growth potential, particularly in green energy and digital infrastructure.
Barrenjoey reckons that Macquarie's exposure to the global energy transition could propel its valuation significantly.
Analyst Jonathon Mott says there's a scenario where the company's shares could hit $600 in a decade.
This, he says, is driven by its involvement in the $US275 trillion energy transition. Talking to The Australian Financial Review, he said:
One of MQG's greatest skills is its long-term focus on global megatrends, with 'patient adjacent growth' into new products and markets to leverage these trends.
The megatrends of decarbonisation, urbanisation and digitisation have decades of runway and Macquarie as a global leader in these fields has substantial opportunities ahead.
Macquarie's data centre investments are also a major growth area. The AirTrunk deal is just one of several data centre investments the company has made.
Barrenjoey notes the banking giant also has a major investment in NTT Data, also a data centre operator, but located in Japan.
It invested $1 billion into a venture with NTT Data to open data centres across the US and Europe.
Are Macquarie shares overvalued at these levels?
All of this – and the recent price action – begs the question of whether Macquarie shares are now overpriced.
For one, the company currently trades on a price-to-earnings (P/E) ratio of 25 times. This is considerably higher than its five-year average of 14.3 times.
In comparison, global banking peers like Goldman Sachs Group Inc (NYSE: GS) and JP Morgan Chase & Co (NYSE: JPM) trade at P/E ratios of approximately 15–16 times and 12–13 times, respectively.
However, when adjusted for growth estimates, Macquarie's price-earnings-growth (PEG) ratio is 1.61, placing it in the middle of the pack compared to its global peers.
Meanwhile, consensus rates Macquarie shares a buy as well. This rating is made up of five buys, seven holds and one sell recommendation.
Based on this distribution, several brokers still think the stock is a buy at these levels.
Foolish takeaway
While Macquarie shares have reached new heights, experts say the company still has a long growth runway ahead of itself.
Macquarie shares are up more than 36% in the past year.
