Macquarie Group: Upgrading guidance

About the author:

Richard Coles
Author name:
By Richard Coles
Job title:
Senior Analyst
Date posted:
23 February 2021, 2:30 PM
Sectors Covered:
Insurance, Diversified Financials

  • Macquarie roup (ASX:MQG) has upgraded recent guidance provided at its February operational briefing for its NPAT to be “slightly down on FY20” to now “up ~5%-10%” on pcp.
  • The upgrade was driven by a strong recent performance in CGM as a result of severe weather conditions across North America which increased client demand for the supply of gas and power.
  • We now forecast an FY21F NPAT broadly per the mid-point of guidance (5%-10% growth on pcp). We make relatively nominal changes to other future year forecasts. Our price target rises (login to view).
  • While FY21 was initially flagged to be a more difficult year for MQG, the diversification of its business has come to the fore and will help it deliver an impressive NPAT growth outcome. We think MQG remains well positioned to seize opportunities on the other side of Covid-19. 

Strong CGM performance driving a guidance upgrade

MQG has upgraded recent guidance provided at its February operational briefing for its NPAT to be “slightly down on FY20” to now “up ~5%-10%” on pcp.

The upgrade is being driven by a strong recent performance in CGM as a result of severe weather conditions across North America which increased client demand for the supply of gas and power.

Changes to forecasts

We now forecast an FY21F NPAT broadly per the mid-point of guidance (5%-10% growth on pcp). We make relatively nominal changes to other future year forecasts. Our price target rises.

Investment view

While FY21 was initially flagged to be a more difficult year for MQG, the diversification of its business has come to the fore and will help it deliver an impressive NPAT growth outcome. We think MQG remains well positioned to seize opportunities on the other side of Covid-19.

We maintain our Add recommendation with > 10% TSR upside existing.

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