GQG Partners Inc (ASX: GQG) shares could be one of the most underrated if Macquarie's price target prediction comes true.
GQG is a funds management business that offers share strategies across global, global excluding the US, US, and emerging market equities. Macquarie Group Ltd (ASX: MQG) says that GQG aims for quality companies that exhibit earnings quality (consistency and predictability), experienced management teams, barriers to entry, and other competitive differentiators.
After seeing the company's monthly update for March 2025, Macquarie updated its thoughts on the business.
Bullish view on GQG shares
Macquarie noted that in the month of March, GQG's funds under management (FUM) grew by 0.9% month on month to $161.9 billion.
The fund manager saw net inflows of $1.8 billion in March, as clients gave GQG more money to manage – that's a positive sign. That compares to a monthly average of $1.7 billion of net inflows over the last 12 months. The investment bank is forecasting around $6.1 billion of net inflows for GQG in the first six months of 2025.
However, it was also noted that weaker markets in March offset overall relative investment performance – GQG's funds can outperform the market but still decline in value. Macquarie said that the net headwind was around $0.4 billion.
The investment bank noted that GQG's main investment funds continued to outperform their benchmarks in the period to 7 April 2025. Over the first week of April, the international equity fund outperformed by 2.22%, the global equity fund outperformed by 1.8%, the emerging market fund outperformed by 2.51%, and the US share fund outperformed by 1.64%.
The outperformance will help GQG's overall FUM and could help attract new FUM and retain existing client FUM.
The investment bank currently has an outperform rating on GQG shares.
Predictions for the fund manager
Macquarie currently has a price target of $2.90 on the business, which is where analysts think the GQG share price will be in 12 months. If that prediction comes true, that implies a possible rise of approximately 46%.
While the investment bank reduced its earnings forecasts for FY25 to FY27 by between 3% and 4.9%, it is still expecting GQG's profit to rise. In FY25, net profit could be $450.2 million, FY26 net profit could reach $481 million, and FY27 net profit could climb to $513.5 million.
Macquarie thinks GQG shares are appealing because they trade on a forward price-earnings (P/E) ratio of around 8 and a dividend yield of more than 10%, so the valuation "remains attractive".
