GQG Partners Inc (ASX: GQG) shares are 0.28% higher at $1.78 while the S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.24%.
Last Friday, the global boutique asset management firm released its 1H FY25 results, and its share price declined 2.7%.
Today, top broker Macquarie has released a note on GQG Partners shares, revealing a newly updated rating and 12-month price target.
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GQG Partners shares up amid optimistic broker appraisal
Macquarie has maintained its outperform rating on this ASX All Ords financial share and shaved its price target by just one cent.
The broker's 12-month price target for GQG shares is now $2.63, implying a sizeable 48% potential upside from here.
Before we hear more from Macquarie, let's recap the 1H FY25 report from GQG Partners.
The key factors in the report:
- Revenue of US$403 million, up 11% on 1H FY24
- Net operating income of $306.8 million, up 12.3% on 1H FY24
- Net profit after tax (NPAT) attributable to shareholders of US$230 million, up 14.4% on 1H FY24
- Total funds under management (FUM) increased 10.8% to US$172.4 billion as of 30 June
- Net inflows decreased 28% from US$11.1 billion in 1H FY24 to US$8 billion in 1H FY25
- Net tangible assets of 8 US cents per share, up from 7 US cents per share in 1H FY24
- Diluted earnings per share (EPS) of 8 cents, up 14.3%
- Unfranked interim dividend of 7.34 US cents per share, up 14.5% on 1H FY24
- Dividend payable on 26 September
GQG Partners noted that investors are increasingly moving away from management funds into exchange-traded funds (ETFs).
This is a global trend that is playing out strongly in Australia, with locals ploughing a record $5.28 billion into ASX ETFs in July alone.
In FY25, GQG adapted to the trend by launching its first active ETF for its US Equity strategy, which has attracted a net $200 million.
GQG Partners also explained that its long-term growth focus and defensive position meant it had missed out on short-term gains.
What is Macquarie's assessment of GQG Partners shares?
Macquarie noted robust performance fees and better cost controls, but disappointing base management fees in 1H FY25.
The broker spoke of "dependable dividends" from GQG Partners shares.
The ASX All Ords financial stock will pay an interim dividend of 7.34 US cents per share for 1H FY25, up 14.5% on 1H FY24.
Macquarie says GQG Partners shares are now trading on a 13% yield.
The broker says potential inclusion in the ASX 300 or ASX 200 at the next rebalance would be a catalyst for GQG Partners shares.
Macquarie analyst Elizabeth Miliatis said:
While relative performance has deteriorated from Dec-24, with funds positioned defensively … GQG has successfully turned periods of underperformance around previously (eg., CY21 and CY23).
Notably, our analysis also suggests GQG's net flows are historically not correlated with fund performance, implying flows are a function of GQG's strong distribution footprint and reputation, and giving us comfort that recent outflows are a short-term headwind.
