Macquarie Group Ltd (ASX: MQG) shares have been having a tough time recently.
So much so, the investment bank's shares are down 10% since the start of the year. This leaves them trading within sight of a 52-week low.
Is this a buying opportunity for investors? Let's have a look.
Why are Macquarie shares under pressure?
Firstly, let's look at what has caused Macquarie's shares to fall out of favour with investors.
The driver of this weakness has been the release of the company's third quarter update back in February.
Macquarie revealed that its net profit after tax for the nine months to 31 December was flat year on year.
Management advised that the profit contribution from Macquarie Asset Management (MAM) and Banking and Financial Services (BFS) – Macquarie's annuity-style businesses – was up "substantially" over the prior corresponding period.
However, this was offset by its markets-facing businesses, Commodities and Global Markets (CGM) and Macquarie Capital. The nine-month profit contribution from these businesses was "substantially down" on the same period last year. This was due mainly to subdued conditions in certain commodity markets.
Should you invest?
The good news is that one leading broker believes that the weakness in Macquarie shares could be a buying opportunity for investors.
According to a recent note out of Ord Minnett, its analysts have put an accumulate and $245.00 price target on them.
Based on its current share price of $199.74, this implies potential upside of almost 23% for investors over the next 12 months.
In addition, a dividend yield of approximately 3% is expected in FY 2025, boosting the total potential return beyond 25%.
To put this into context, a $5,000 investment would turn into approximately $6,250 by this time next year if Ord Minnett is on the money with its recommendation.
Why is it bullish?
The broker believes that Macquarie is well-placed to benefit from 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.
