Which financial stock is Macquarie Tipping to return 50%?

Earlier this week, Pinnacle Investment Management Group Ltd (ASX: PNI) reported a half-year profit that had dipped a little.

This didn’t seem to deter investors in the stock, which bid the price up on results day, and it certainly hasn’t warned off the analyst team at Macquarie, which has an outperform rating on the stock and a bullish share price target.

An unexceptional profit

But first to the results, the company said net profit came in at $67.3 million, down 11% for the same period in 2024.

On the upside, the company said it had record net inflows of funds for the first half of $17.2 billion, with domestic retail inflows of $6.8 billion, domestic institutional inflows of $7 billion, and international inflows of $3.4 billion.

The company had cash and principal investments of $439.6 million at the end of the quarter.

Pinnacle also announced this week that it would buy the remaining 79.2% interest in Pacific Asset Management that it did not currently own for $418.8 million.

The company said that this agreement would accelerate its global growth, “with complementary distribution platforms to enhance geographic reach, affiliate origination, product innovation and expansion”.

Pinnacle declared an interim dividend of 29 cents per share, down 12% on the dividend for the same period last year.

Pinnacle Chair Alan Watson said re the result:

Our broad platform of affiliates and strategies, together with increasing presence in much larger addressable end markets, has underpinned a strong net flow outcome for the half, which will drive revenue growth in future periods. It is pleasing that all existing affiliates are profitable with revenues and core earnings continuing to build. Finally, we are delighted to welcome our nineteenth affiliate, Advantage Partners of Japan, and today announce further investment into Pacific Asset Management. We are confident that both of these growth initiatives will be to the benefit of our clients, people and shareholders.

Shares still looking cheap

Macquarie, in a research note sent to clients, said it was forecasting 18% compound annual growth for Pinnacle for the years out to 2030.

The analyst team said the business was well set up to grow, and added:

Pinnacle has an attractive organic growth outlook and potential to add accretive mergers and acquisitions. Outlook for organic performance is backed by net flows, performance fees, and operating leverage.

Macquarie has a 12-month price target of $25.25 on the stock, which, including the 3.5% dividend yield, would return shareholders 50.9% if achieved.

The post Which financial stock is Macquarie Tipping to return 50%? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Pinnacle Investment Management Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.