Australian Investment Blog

Uncategorized 19/06/2018

Macquarie (MQG) cops upgrade from Morgan Stanley

Stock

Macquarie (MQG) $118.71 as at 19/06/2018

Event

Morgan Stanley have put out a bullish note on Macquarie (MQG) today, pinning a $130.00 price target on the stock. They give 10 reasons to underpin their bullish stance, notably - (1) Earnings and ROE upgrade cycle continues; (2) Geared to the real economy, not just financial markets; (3) Leading Alternative Asset Manager; (4) Lumpy revenues pipeline is growing, reducing near-term earnings risk; (5) Initial guidance is usually conservative, implying upside risk to consensus; (6) 5 year growth potential gives us longer term confidence; (7) Offshore earner; (8) Leveraged to segments with structural growth; (9) Flexibility on the compensation ratio; and (10) Strong capital position. (source Morgan Stanley) Macquarie (MQG) Chart Macquarie Group chart

Their earnings expectations now sit about 10% above consensus – a bullish stance (clearly)! Here’s current broker calls…although Morgan Stanley is hot off the press so has not yet been updated on Bloomberg

Source; Bloomberg

Market Matters Take/Outlook

While the trend in Macquarie is clearly bullish, and Morgan Stanley make some good points, we can’t help but think their change of stance will prove to be the tipping point for the stock – or in other words, the catalyst for a meaningful high in Macquarie. Equity markets were weak today led lower by US Futures on another Trump trade tantrum – with the futures pricing a drop of -300pts when the Dow Jones opens in the US. Macquarie is an equity linked play, and any weakness in the market should be amplified in the MQG share price.

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