Shares in investment banking giant Macquarie Group Ltd (ASX: MGQ) edged higher in the afternoon today and finished trading at $182 apiece.
That’s a shade off its all-time high of $183.71 which it hit in early trade this morning.
These are impressive results for the bank, which has rallied 6.5% in the last month and recovered from a previous low of $171.93 on 21 September.
Why don’t we dive in and see what’s been fuelling this growth in the Australian banking group’s share price lately.
What tailwinds are behind the Macquarie share price?
Taking a step back and looking at a wider time frame, it was a good month in September for Macquarie’s share price.
Early last month the bank gave an investor presentation detailing its outlook for the coming periods.
From its presentation, the company expects a significant increase in operating profit for the first quarter of FY22, due to the sale of some of its business segments, and strengths in others.
It did, however, say it expects a slight down-step in earnings from the second half of FY21, but that it still expects significant year on year growth in its FY22 first half results.
Aside from this, Macquarie believes it is well positioned to capitalise on tailwinds that have emerged from its investments into renewable energy.
Macquarie is a large green and renewables investor, with over $2 billion in current funding commitments on its books, and another $45 million ready to support green energy.
With this, it believes it will continue to deliver outsized returns over the coming years, as energy production and consumption trends begin to shift away from fossil fuels.
Investors have been buying the company’s growth narrative this past month, and appear to be pricing in the company’s future growth potential with this flurry of buying activity.
Can Macquarie keep it up to justify its all-time high share price?
One leading broker seems to think so. Analysts at investment firm Jeffries believe the company has the legs to outperform the consensus view at its upcoming half-year results.
Jeffries forms its view partly due to the recent turbulence in global gas markets, but also see’s strengths from Macquarie recently gaining market share in the home and business loans markets.
It also believes that with the upcoming 2021 COP26 UN Climate Change Conference just around the corner, Macquarie could be on the receiving end of favourable government initiatives that may follow the conference.
Not only that, in terms of market size, Macquarie’s total addressable market in this segment is “far bigger than (its) present $66 billion market capitalisation”, which is a bullish signal, according to Jeffries.
As such, it has a $211 price target on the Macquarie share price, implying a 16% upside potential from the last market price.
Macquarie shares are also up 41% in the last year, ahead of the S&P/ASX 200 index (ASX: XJO)’s return of around 25% in this time.
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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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