Here’s why these top brokers reckon the Magellan (ASX:MFG) share price is cheap

Could Magellan shares still be a buy today?
The post Here’s why these top brokers reckon the Magellan (ASX:MFG) share price is cheap appeared first on The Motley Fool Australia. –

The Magellan Financial Group Ltd (ASX: MFG) sahre price is having a pretty happy day this Friday. Magellan shares are, at the time of writing, trading at $33.55 each, up a healthy 4.48% so far today.

But if we put that in just a little bit of context, it doesn’t look quite as good as it might seem. It was only yesterday that Magellan, one of the ASX’s largest fund managers, hit a new 52-week low of $31.34 a share. That’s the lowest Magellan shares have been since early 2019.

This descent into these new lows seemed to have been sparked by Magellan’s latest funds under management (FUM) report. On Wednesday this week, Magellan announced that its FUM for the quarter ending 30 September (the first quarter of FY2022) came in at $113.3 billion.

That was a decline of roughly $600 million from where it stood at the start of the quarter. It also represented a fall of $4.7 billion from where Magellan’s FUM was at the end of August.

This obviously wasn’t good news for the company, and investors seemed to have reacted accordingly.

But now that Magellan shares are sitting just a few percentage points off of their new 52-week low, some investors might be wondering if this is a sitting bargain.

Well, we have some insights on that question today.

Could the Magellan share price be a buy today?

As my Fool colleague James covered yesterday, the Magellan share price is looking attractive to the broker Macquarie. Macquarie has retained an ‘outperform’ rating on Magellan shares, albeit with a reduced 12-month share price target of $38. That still implies a potential 12-month upside of close to 15%.

Although, as we covered yesterday, Macquarie is still worried that Magellan’s FUM will remain under pressure for at least the rest of FY22, it still thinks the shares are “too cheap to ignore” right now. Macquarie is also eyeing the possibility of a dividend yield of 7% or so in FY22.

Macquarie isn’t the only broker bullish on Magellan either. According to reporting in today’s Australian Financial Review (AFR), another leading broker sees an even more optimistic 70% upside for the company.

At the current Magellan share price of $33.4, this company has a market capitalisation of $6.19 billion, a price-to-earnings (P/E) ratio of 23.13 and a dividend yield of 6.32%.

The post Here’s why these top brokers reckon the Magellan (ASX:MFG) share price is cheap appeared first on The Motley Fool Australia.

Should you invest $1,000 in Magellan right now?

Before you consider Magellan, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Magellan wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

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Why A2 Milk, CBA, Flight Centre, & Magellan’s shares are sinking

The Magellan (ASX:MFG) share price is in focus on $1.5 billion FUM outflow

Motley Fool contributor Sebastian Bowen has no position 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 has no position in any of the stocks mentioned. 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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