Big deals on the horizon for Macquarie Bank
SMH September 27, 2005 - 4:43PM
Macquarie Bank Ltd shares continued their stellar run today as investors look forward to a number of potential deals over the coming months.
As the investment bank's shares race towards the $80 mark, analysts are also questioning whether a share split could be conducted to make the stock more attractive to mum and dad investors.
Macquarie Bank shares hit an intraday peak of $78.23 before ending up 60 cents at a new closing high of $74.64, making for a rise of $4.57 in the last two sessions.
The surge came after the bank yesterday upgraded its guidance for the current financial year ending March 31, 2006, saying it expects net profit to at least equal last year's $823 million.
Brokers today upgraded their forecasts, saying they believed the guidance was conservative as a number of major deals were still on the horizon.
Macquarie Bank had previously indicated it was considering leading a consortium in a bid for the London Stock Exchange.
British media outlets are reporting that a bid of more than £1.5 billion ($3.6 billion) could be announced as early as this week.
The investment bank has also appointed advisers as it prepares to float its radio assets into a new media fund.
Macquarie is also considering listing a couple of its infrastructure funds - one in Europe and the other in Korea, with a spokesman today confirming that the latter may occur "by the end of the calendar year".
Credit Suisse First Boston now believes Macquarie Bank's earnings could top the $1 billion mark in any of the next three years.
However, Goldman Sachs JBWere has cautioned that the share price was starting to look fully valued.
"Earnings risk on the downside could emerge from performance fees," said analyst James Freeman.
"So far in the second half of this calendar year, Macquarie Bank's specialist funds have not performed well.
"Should this underperformance continue, performance fees will come under increasing pressure."
There are also suggestions that the share price is becoming unwieldy - especially for the 20 per cent of Macquarie Bank's shareholders that are retail investors.
It's now one of the highest value stocks on the Australian Stock Exchange.
UBS, which has valued the bank's shares at $85 each, said a share split would be positive for the stock as Australian retail investors had traditionally been reluctant to purchase stocks with high share prices.
A share split technically does not affect the underlying value of the stock - it simply reduces the price through the issuance of more shares.
Macquarie chief financial officer Greg Ward said in July that a share split was not on the cards because it would not generate significant shareholder value.
Intersuisse director of equities Andrew Sekely said he thought it unlikely that Macquarie Bank would now change its mind.
"For an American investor, $76 is no big deal really," Mr Sekely said.
"There are prices in the hundreds in the United States."
dutchie said:The DOW is up this morning so going on past few days
MBL could go up $2 - $3 (thats the theory anyway!)
But when has the stockmarket followed theories???
This is not advice just an observation!
Julia said:Hi Visual,
It was recovering as you wrote. Good buying opportunity.
Julia
nizar said:yes i agree, good buying opportunity...
i been wanting 2 pick these up for sub-65 for a while...
why the sell-off u think?
markrmau said:Looks like a nice short doesn't it? Broken out below the 61-65$ trading range on higher volume. Stop circa $63.
NOTE: Average broker recco is approx $80 so this is going against the experts recommendation.
sails said:Visual, could be due to earnings announcement tomorrow - here's the link to the shareholder calendar on their website: http://www.macquarie.com.au/au/about_macquarie/shareholder_calendar.htm
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