Macquarie Group has announced, with two weeks remaining in the first half, it expects profit (NPAT) to be around $950m. This is around -25% lower than the second half of 2020.
The many factors driving the earnings pressure are unchanged in the view of UBS and include weakness in Commodities and Global Markets due to an easing of volatility, following a strong April and May. Additionally, investment income is likely to be significantly lower, impacting Macquarie Asset Management (MAM) and Macquarie Capital Markets.
The bank is highly leveraged to transaction activity and the outlook for deal flow remains very challenging, notes the broker.
Whilst EPS forecasts are downgraded, UBS raises the target price due to a lower cost of capital and higher peer multiples.
The Neutral rating is unchanged. The target price is increased to $125 from $105.
Sector: Diversified Financials.
Target price is $125.00.Current Price is $120.05. Difference: $4.95 – (brackets indicate current price is over target). If MQG meets the UBS target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).