Macquarie places 'outperform' rating on this ASX All Ords financial services stock

This financial services stock seems to be going from strength to strength.

| More on:
Man smiling at a laptop because of a rising share price.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The All Ordinaries Index (ASX: XAO) has strengthened 0.93% over the past month and is up 0.47% at the time of writing this afternoon. And it seems like one All Ords financial services stock is driving some of the gains.

At the time of writing, Australian Finance Group Ltd (ASX: AFG) shares are trading 1.66% higher for the day, at $2.145 apiece. Over the year, the group's share price has risen an impressive 52.13%, the majority of which (42.05%) has occurred since early April.

For context, the All Ords Index has risen 4.60% for the year to date.

AFG's climbing share price can be attributed to the Reserve Bank's latest interest rate cuts. Combined with higher property prices, the market shift has sparked more confidence in the sector.

AFG has an extensive broker network and is expected to be well-positioned to meet the rising demand for home loans. In particular, it's manufacturing arm – AFG Home Loans – is expected to drive the majority of business revenue growth and profitability.

Here's what Macquarie Group Ltd (ASX: MQG) has to say about the stock.

Macquarie's view on ASX All Ords stock

In a recent note to investors, the broker maintained its outperform rating on AFG shares and increased its 12-month target price to $2.20, up from $1.80. The upgraded target price represents a potential 2.56% upside.

"PT $2.20 (from $1.80), driven by higher multiple, implies ~13x 1Y fwd Cash EPS (from 10.5x), and compares to majors banks ex-CBA of ~16x. Our confidence reflects record lodgements, improved funding and operating leverage,'' the investor note said.

According to Macquarie, AFG's Home Load product activity and margin stabilisation are key growth drivers and support the broker's earnings outlook.

The group's total lodgement activity is a key driver of earnings in AFG's aggregation business. Total lodgements were up 18.7% year-on-year in Q4 2025. Volumes were 12.1% higher over the period, and the average loan size was 5.9% higher.

"Macquarie analysis of the AFG Home Loan lodgement data shows lodgements of ~ $1.81bn in 4QFY25, vs ~$1.78bn in the pcp, comprising AFG Securitisation (AFG Branded and AFG Funded product) and White-label product (AFG-branded, third-party funded product). 61% of was AFG's own funded AFG Securities products," the investor note said.

"AFG disclosed 61% of AFG HL product lodgements in 4Q25 were AFG's own higher margin AFG Securities products, vs 56% in the previous two quarters. This implies ~$1.1bn of AFG Securities product lodgements in 4Q25, and has stepped up compared to an average of ~0.9bn in the previous 6 quarters".

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Financial Shares

A doctor appears shocked as he looks through binoculars on a blue background.
Financial Shares

Up 286% in 5 years, why are investors paying 100x earnings for HUB24 shares?

Investors are paying for growth at scale, but the risks remain.

Read more »

Man standing with an umbrella over his head with a sad face whilst it rains.
Financial Shares

IAG share price drops 13 in a year: Buying opportunity or time to sell up?

Wild weather events appear to be denting investor confidence.

Read more »

A man wearing a suit and holding a colourful umbrella over his head purses his lips as though he has just found out some interesting news.
Financial Shares

Looking at the IAG share price? Here's how much this stock pays in dividends

Despite a rough year, 2025 saw IAG hike its dividends substantially.

Read more »

CEO of a company talking to her team.
Financial Shares

AMP shares sliding today on big leadership news

AMP shares are in the red amid a top-level leadership handover.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Financial Shares

A major change to the Djerriwarrh dividend is on the way

This fund has kept its dividend steady despite underperforming its benchmark.

Read more »

Stethoscope with a piggy bank in the middle.
Financial Shares

NIB share price up 22% in 12 months, but could face short-term weakness. Here's what investors should know

NIB shares have risen strongly over the past year, but recent weakness suggests momentum may be easing.

Read more »

A woman wearing a lifebuoy ring reaches up for help as an arm comes down to rescue her.
Financial Shares

Goldman Sachs tips 19% upside for Suncorp shares…plus dividends!

Goldman Sachs expects Suncorp shares to outperform in 2026.

Read more »

a woman sits in comtemplation with superimposed images of piles of gold coins, graphs and star-like lights above her head as though she is thinking about investment options.
Blue Chip Shares

If I invest $15,000 in Macquarie shares, how much passive income will I receive in 2026?

Is Macquarie a great option for dividend income?

Read more »