Here’s why the Macquarie Group Ltd (ASX:MQG) share price hit a record high on Wednesday and could still go even higher from here…
The post Why the Macquarie (ASX:MQG) share price just hit a record high appeared first on The Motley Fool Australia. –
The Macquarie Group Ltd (ASX: MQG) share price was pushing higher in early trade on Wednesday before giving back its gains as the day went on.
In fact, the investment bank’s shares climbed enough in early trade to hit a record high of $153.50.
When the Macquarie share price hit that level, it extended its six-month gain to a sizeable 20%.
Why is the Macquarie share price at a record high?
The Macquarie share price has been storming higher over the last few weeks thanks largely to an update in late February.
That update revealed a surprise upgrade to its earnings guidance for FY 2021 less than two weeks after issuing it.
On 9 February, Macquarie advised that it was expecting its profit result in FY 2021 to be down slightly year on year.
However, due to the recent extreme winter weather conditions in North America, Macquarie now expects its profits to increase ~5% to ~10% year on year.
The company explained that the extreme winter weather conditions significantly increased short-term client demand for its capabilities in maintaining critical physical supply across the commodity complex and particularly in relation to gas and power.
Macquarie’s Commodities and Global Markets (CGM) business physically ships gas through the majority of major pipelines across the United States. Over time it has built capacity to support clients by delivering power and physical commodities to help them meet the unexpected needs of their customers, such as in February.
What else drove its shares higher?
Also giving the Macquarie share price a boost was the response to this update by brokers.
Morgans and Morgan Stanley are particularly positive on the company. The former put an add rating and $162.30 price target on its shares, whereas the latter put an outperform rating and $160.00 price target on them.
In light of this, although the Macquarie share price hit a record high this morning, there’s still a chance it could climb beyond this in the coming months.
Especially given the improving conditions in the banking sector and its attractive yield. Morgans is forecasting an FY 2021 dividend of ~$5.36 per share. This represents a 3.6% yield.
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*Returns as of February 15th 2021
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Motley Fool contributor James Mickleboro 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.