Macquarie Group has announced the acquisition of Waddell & Reed Financial (WRF), a US-listed Asset Management (AM) and Wealth Management (WM) business.
Strategically the acquisition makes sense to Morgans, adding significant scale and AM diversity. The area of concern is considered WRF’s declining funds under management (FUM) profile over time, meaning the business will have to be reinvigorated.
The broker leaves the FY21 EPS forecast unchanged and lifts the FY22 EPS estimate by around 3%.
The Add rating is unchanged and the target price increased to $147 from $141.20, after the forecast earnings change and an increase in long-term growth assumptions.
Sector: Diversified Financials.
Target price is $147.00.Current Price is $139.85. Difference: $7.15 – (brackets indicate current price is over target). If MQG meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).