Commonwealth Bank of Australia (ASX: CBA) is undoubtedly one of Australia's highest quality companies.
But with its sky-high valuation posing significant downside risk, it may not be the best option in the financial sector.
One ASX 200 financials stock that Macquarie Group Ltd (ASX: MQG) believes would be a better pick is named below.
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Which ASX 200 financials stock?
The stock in question is AUB Group Ltd (ASX: AUB).
It owns a group of retail and wholesale insurance brokers and underwriting agencies operating in approximately 579 locations globally.
Macquarie notes that the ASX 200 financials stock released its full year results this week and delivered the goods. It said:
FY25 Underlying NPAT at the top end of guidance up 17.1% YoY. EPS 171.8cps up 9.5%, reflecting share count from the capital raise in FY24 to fund acquisitions.
International was a beat to VA cons expectations by ~20%. uPBT +7.6% and EBIT +10.2% YoY, with Tysers contingent consideration of £57.4m agreed in Feb-25, 95% of the maximum. International saw material improvement in 2H25, boosted by acquisition growth with UK Retail scale from £110m GWP FY24 to £340m in FY25.
The broker also highlights that the company is guiding to solid earnings growth in FY 2026. In addition, its medium term targets imply earnings that are comfortably ahead of Macquarie's own expectations. It adds:
FY26 UNPAT guidance $215-227m, ~7-13% growth yoy, comprising: 1) 5.6-11.1% Organic growth; and 2) 2.7-3.2% Acquisition growth. • AUB's medium-term targets imply ~9% upside to our FY28 EBIT forecasts. International & Aust Brokers are the key contributions.
Double-digit return potential
According to the note, Macquarie sees potential for strong returns from the ASX 200 financials stock over the next 12 months.
In response to its results, it has retained its outperform rating with an improved price target of $37.40 (from $35.45).
Based on its current share price of $34.20, this implies potential upside of approximately 9.5% for investors.
In addition, Macquarie is expecting dividend yields of 2.9% in FY 2026 and then 3% in FY 2027, which boosts the total potential return to over 12%.
Commenting on its outperform recommendation, the broker said:
Outperform. AUB is executing well across multiple earnings growth opportunities, and industry conditions support earnings growth outlook.
Valuation: Target price $37.40 (from $35.45) reflects EPS changes, valuation roll-forward and current market multiples. Catalysts: Delivery of FY26 guidance and ongoing progress towards medium-term targets.
