Macquarie Group Ltd (ASX: MQG) shares could be about to embark on a record-breaking run.
That's the view of analysts at Ord Minnett, which are tipping the investment bank's shares to climb to an all-time high.
What is the broker saying about Macquarie shares?
Ord Minnett notes that Macquarie released its half year results at the start of the month.
The broker highlights that the results were short of the market's expectations and included a downgrade to its Commodities and Global Markets (CGM) and Macquarie Capital full year guidance. This continues Macquarie's recent downgrade cycle. It said:
Macquarie reported a soft first half for FY25, coming in 6% below consensus. The group also downgraded its full-year guidance for its CGM business and Macquarie Capital arm, due to lower trading revenue and softer investment income, respectively. This led to a 7% downgrade for FY25, marking the sixth consecutive downgrade since earnings peaked in FY23.
And while Macquarie remains optimistic on the future, Ord Minnett concedes that revenue growth is more challenging now than it was in previous years. It adds:
Macquarie remains optimistic about its long-term prospects, however, expecting gains from the sale of green assets like Cero solar and performance fees from data centre disposals, including AirTrunk in Macquarie Asia Infrastructure Fund 2 (MAIF2). However, increased supply in energy markets, reduced volatility, and new competitors have made revenue growth more challenging.
Remaining bullish
Despite the above, the broker remains bullish on Macquarie shares. This is due to its market leverage and improving transaction activity, as well as its opportunities in green energy and data centres. It explains:
Macquarie remains confident in its investment opportunities, which should support future growth in funds under management and asset realisations. Despite a 7% reduction in FY25E earnings, we retain an Accumulate recommendation due to the group's market leverage and improving transaction activity.
We see significant opportunities in green energy models and data centres, which align with mega-trends and offer substantial medium-term potential. Our estimates for the FY26 and FY27 years remain largely unchanged, and our price target has increased by $15.00 to $245.00.
As mentioned above, the broker has reaffirmed its accumulate rating on Macquarie's shares with an improved price target of $245.00.
Based on its current share price of $229.91, this implies potential upside of 6.6% for investors over the next 12 months. And if you include dividends, the total potential return is closer to 10%.
