Macquarie reports well – markets drift into the weekend (MQG)
WHAT MATTERED TODAY
After a very strong week for stocks, the market cooled / consolidated today with the ASX 200 falling 33pts, the banks provided most weight on the index while it seemed there was a simply a lack of buying appetite ahead of a fairly important US employment print due out this evening. +190k jobs added and an unemployment rate at 4% is expected however the main focus will be on wages growth, consensus sitting at a +0.2% increase in average hourly earnings so any meaningful increase there would be seen as a negative. Higher wages growth feeds inflation which means higher rates.
On the market today, the ASX 200 lost 33pts or 0.55% to close at 6064 points.
ASX 200 Chart
ASX 200 Chart
Direct From The Desk - the market was quiet this afternoon ahead of the US employment data out tonight. Macquarie reported well this morning and the stock was trading higher – I discuss those these below.
CATCHING OUR EYE
Weekly Moves – Stocks & Sectors;
A very positive week for the Australian market in absolute terms, but also in a relative sense with strong outperformance against other global markets. The IT sector saw the most love while the Energy sector lagged
Sector moves over the week
In terms of stocks, Seven West Media was on fire following a very bullish update early in the week while Wisetech Global recovered strongly after a bout of weakness early in the year which saw its share price down from $16+ to ~$9. It closed today at $12.28
On the flip side, downgrades from funeral provider Incovcare (IVC) and JB Hi Fi (JBH) saw both companies down sharply.
Stock moves over the week
Broker calls; NAB has been downgraded today from T S Lim at Bells – he’s a good analyst although doesn’t rate well on NAB.
* NAB Downgraded to Hold at Bell Potter; Price Target A$31
Here’s the broader analyst view on NAB – consensus price target sits at $32.39 implying 11.6% upside from here
* APN Outdoor Downgraded to Sell at Citi; PT A$4.50
* Bendigo & Adelaide Downgraded to Hold at Morningstar
* Qube Downgraded to Hold at Morningstar
* Flight Centre Downgraded to Sell at Morningstar
* Vocus Downgraded to Hold at Morningstar
* Regis Resources Downgraded to Underweight at JPMorgan; PT
A$4.20
* St Barbara Downgraded to Neutral at JPMorgan; PT A$4.50
* Independence Group Raised to Accumulate at Hartleys Ltd
Macquarie (MQG) $108.01 / +0.24%; Another impressive result for the bank this morning, coming in ~3% above guidance & consensus with NPAT at $2.557m – up 15% year on year - and EPS a huge 7% above consensus at 758cps. The result was underpinned by keeping a lid on costs and performance fees coming in above expectations. Investors were also treated to a larger than expected dividend, paying $3.25/share with 45%, which represents a payout ratio of 70% - likely driven by the tier 1 capital ratio rising to the top end of the range. As has been the case for the past few results, Macquarie has guided to no growth to 2019, consistently understating performance.
While we were happy to take the 8.8% profit earlier in the week, we still do like Macquarie at MM – they have a solid earnings composition, along with great international exposure – however it is clearly leveraged to capital markets and will see a significant correction if markets are to pull back.
Macquarie (MQG) Chart
OUR CALLS
No trades in the MM Portfolio’s today
Have a great night
Harry & the Market Matters Team
Disclosure
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
Disclaimer
All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 04/05/2018. 4.24PM
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