How much upside does Macquarie top for AMP shares?

AMP Ltd (ASX: AMP) shares have been on form over the past 12 months.

During this time, the financial services company's shares have risen approximately 22%.

As a comparison, the ASX 200 index has risen by 11% over the same period.

Can its shares keep rising? Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about this ASX 200 stock.

What is Macquarie saying about AMP?

Macquarie has been busy updating its forecasts to reflect mark-to-markets on investment income and monthly APRA bank data. It said:

Bank: May '25 update on gross loans, acceptances, and advances (GLAA): AMP's GLAA balance has risen +0.6% since Dec '24. This compares with company expectations of "slight growth". This compares to FY25 GLAA growth expectations for Visible Alpha consensus of +1.4%.

NIM: We forecast 1H25 net interest margin (NIM) of 125bps vs. guidance of broadly in line with FY24, i.e. 126bps (VA consensus: 125bps). Sensitivity: 1bps to NIM equates to ~0.9% group EPS. $1b (~4.2%) to GLAA equates to ~2.0% group EPS (assuming no change to NIMs or controllable costs).

The good news is that this has led to the broker bumping its earnings estimates for AMP higher for the coming years. It said:

Earnings changes: FY25E: +5.8%; FY26E: +9.6%; and +4.6% to +5.4% thereafter reflecting investment market in 2H25 rolling through into FUM over multiple years.

Can AMP shares keep rising?

According to the note, the broker feels that AMP shares are undervalued at current levels. It highlights the discount to medium term averages that they trade on. The broker explains:

AMP currently trades at a ~11.7x 12-month forward P/E, or ~16.6% below the three-year average of ~14.1x. This translates to a ~39% discount vs the ASX100 (compared with the three-year average discount of ~10%).

This morning, the team at Macquarie has reaffirmed its outperform rating and lifted its price target on AMP's shares to $1.44 (from $1.34).

Based on its current share price, this implies potential upside of 7.5% for investors over the next 12 months. It also expects a dividend yield of approximately 3% over the period, which boosts the total potential return on offer here beyond 10%.

Commenting on its bullish view of this ASX 200 stock, the broker concludes:

We are beginning to see signs of stabilisation in underlying business, and at current valuations, we retain Outperform.