Macquarie Group Ltd (MQG) - Donut rolls on

Macquarie Group is a global investment bank and asset manager operating through four segments: Macquarie Asset Management (MAM),Banking and Financial Services (BFS), Commodities and Global Markets (CGM), and Macquarie Capital.

Macquarie reported a soft first half for FY25, coming in 6%below consensus. The group also downgraded its full-year guidance for its CGMbusiness and Macquarie Capital arm, due to lower trading revenue and softerinvestment income, respectively. This led to a 7% downgrade for FY25, markingthe sixth consecutive downgrade since earnings peaked in FY23.

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Macquarie remains optimistic about its long-term prospects, however, expecting gains from the sale of green assets like Cero solar and performance fees from data centre disposals, including AirTrunk in Macquarie Asia Infrastructure Fund 2 (MAIF2). However, increased supply in energy markets, reduced volatility, and new competitors have made revenue growth more challenging.

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The company is also investing in transport and infrastructure, digital assets, and recycling capital in green and conventional energy assets. Equity investments decreased by 7% to $12.3 billion in 1H25,mainly due to the transfer of green assets to the Macquarie Green Energy Capital Opportunities fund and the completion of a new head office.

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Macquarie remains confident in its investment opportunities, which should support future growth in funds under management and asset realisations. Despite a 7% reduction in FY25E earnings, we retain an Accumulate recommendation due to the group’s market leverage and improving transaction activity. We see significant opportunities in green energy models and data centres, which align with mega-trends and offer substantial medium-term potential. Our estimates for the FY26 and FY27 years remain largely unchanged, and our price target has increased by $15.00 to $245.00.

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