ASX investors are always on the lookout for ASX 200 stocks with significant upside.
With the S&P/ASX 200 Index (ASX: XJO) closing at 8,945.90 points yesterday (not far off its all time high of 9,054.50 points) investors may be struggling to find opportunities with material upside.
On 2 October, Macquarie Group Ltd (ASX: MQG) released a new research note, Asset Managers: Sep-25 Mark-to-market, where it explored the outlook for three ASX 200 fund manager stocks.
The broker placed an outperform rating on two of those stocks, and an underperform rating on the other.
Let' dig deeper into the three stocks named.
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GQG Partners Inc (ASX: GQG)
GQG Partners is a US-based global asset management firm that actively manages equity portfolios for institutional investors and individuals worldwide.
Last month, The Motley Fool's Bronwyn Allen reported that GQG Partners was one of nine ASX shares to enter the ASX 200 Index.
Over the past 12 months, the stock has fallen 35%. As a result, its trailing dividend yield now sits at nearly 13%.
At the current share price, Macquarie considers GQG Partners materially undervalued.
The broker has a price target of $2.55 on the stock.
Given that GQG shares closed at $1.76 yesterday, this suggests more than 60% upside from here, including capital gains and dividends.
In support of this price target, the broker said:
While relative performance has deteriorated from Dec-24, with funds positioned defensively (O/W utilities and consumer staples, U/W tech and consumer discretionary), our analysis 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. With resilient fee and profit margins, coupled with an attractive yield of 12.8% (3Q ex-dividend date on ~12-Nov), we reiterate our Outperform rating.
Perpetual Ltd (ASX: PPT)
Perpetual provides financial services and wealth management for high-net-worth individuals and businesses.
The ASX 200 company is up 3% over the past year. However, up until yesterday, it was in the red, with a 6% share price jump placing the stock back into positive territory.
This surge coincided with Macquarie upgrading its price target on Perpetual shares from $22.85 to $23.95.
Given that shares ended at $19.99 yesterday, this suggests more than 24% total upside from here (Perpetual currently offers a dividend yield of 4.03%).
The broker also upgraded the stock from neutral to outperform.
Explaining its upgraded rating and price target, Macquarie said:
Despite key global markets rallying through the Sep-25 quarter, with Global Equities and US Equities up +7.0% (MSCI World) and +5.5% (S&P500) respectively, both of which collectively add almost 60% to PPT's FUM, the stock has underperformed the ASX200 by -12.7% since FY25 results. Thus, we upgrade PPT to an Outperform rating (from Neutral), with its upcoming Sep-25 FUM update in mid Oct-25 expected to drive consensus upgrades (MRE FY26E EPS +4% ahead of Visible Alpha consensus).
Magellan Financial Group (ASX: MFG)
Magellan Financial Group is a global fund manager.
After trading above $60 in 2020, the stock fell by more than 50% in 2021 and has yet to recover.
Yesterday, shares closed at $9.94.
Many value investors seek out beaten-down stocks, hoping to find a catalyst for a rebound.
However, Macquarie believes Magellan shares will not recover from here.
Instead, they have assigned an underweight rating on the ASX 200 stock and a price target of $8.55.
The broker explained:
We see downside risks to consensus FY26E EPS (MRE 6% below FY26E consensus), due to lower associate profits (principally due to the expectation of more modest Vinva performance fees), higher-sub advisory fees paid by MFG to Vinva and lower distribution income on MFG's seed book. Further, with the Infrastructure PM officially departing MFG in Jul-25, we continue to see downside risks to net flows over the coming 6 months.
