Macquarie Group (ASX: MQG) Why a 21% Rally Into Earnings Looks Stretched
Macquarie Group has rallied more than 21 per cent in the past month, pushing the share price back to within striking distance of its all-time high. The forward price-to-earnings multiple is now around 24 times, against a ten-year average closer to 16 times. We think the risk-reward is poor at this level. Our view is sell ahead of the FY26 result on Friday 8 May, with fair value closer to A$218 implying around 9 per cent downside.
Research published 27 April 2026. Price target and downside based on prices at time of publication.
About Macquarie Group
Macquarie Group is Australia’s largest investment bank and asset manager. The business runs across four segments. Macquarie Asset Management is the global infrastructure and real assets manager with around A$941 billion of assets under management as at 31 March 2025. Banking and Financial Services is the Australian retail bank, mortgage book and wealth platform. Commodities and Global Markets is the trading, financing and risk-management arm that has been Macquarie’s earnings engine through the energy-volatility cycle of the past few years. Macquarie Capital is the advisory and principal-investment business. The group is listed on the ASX with a market cap above A$90 billion and is a top-ten name in the S&P/ASX 200. More on the company at macquarie.com.
The setup
MQG opened at A$241.50 on 21 April 2026, a fresh 12-month high and within a hair of the A$242.90 all-time high set in January 2025. The one-month move was around 23 per cent. On a price-to-earnings basis, MQG is now trading at roughly 24.2 times forward earnings against a ten-year median of about 15.7 times. That is a 55 per cent premium to its own history. Markets do not usually award 55 per cent valuation premiums to a business whose biggest segment, Commodities and Global Markets, has just printed a year of declining earnings.
That is the gap we want to lean into. When a stock rallies 20-plus per cent in a month into a softening earnings backdrop, the multiple is doing all the work. A multiple has to be defended by either a step-up in earnings or a step-down in the discount rate. Neither looks likely on a 12-to-18 month view.
Why we think the multiple is stretched
Three things drive our view that consensus FY28 earnings will need to come down rather than up.
The first is a slower global economy over the next 12 to 18 months. Macquarie has high operating leverage to global activity through both Commodities and Global Markets and Macquarie Capital, so a softer growth environment hits revenue without a matching cost adjustment. The second is moderating deal activity. Global M&A volumes have been recovering off the 2023 trough, but the pace of recovery looks set to flatten rather than re-accelerate, which trims principal and advisory fees in MacCap. The third is a stronger Australian dollar. Around two-thirds of Macquarie’s revenue is offshore, so AUD strength is a direct earnings translation headwind.
Stack those three together and FY27 group net profit somewhere around A$4.5 billion looks more plausible than the current consensus print of around A$4.6 billion, and FY28 around A$4.7 billion against consensus closer to A$5.0 billion. That is a 6 to 7 per cent gap on the out-year, which on a 24x multiple is the difference between A$242 and something closer to A$218. There is a growing case forming around this view across analyst desks over the past month.
The bull case to weigh against
There are two recent strategic wins that the market has been pricing into the rally and that any bear case has to account for honestly.
The first is the sale of Aligned Data Centers in October 2025. Macquarie Asset Management agreed to sell Aligned to a consortium led by BlackRock-GIP and MGX, with Microsoft, Nvidia and xAI as anchor backers, in a transaction valued at around US$40 billion. Macquarie first invested in Aligned in 2018. This is the largest data-centre M&A on record and locks in a major realisation gain for MAM, which feeds straight back into performance fees and management’s ability to raise the next infrastructure fund. AI-driven data-centre demand is the single biggest theme in global infrastructure right now and Macquarie just cashed out at the top of the cycle.
The second is the Qube takeover announced in February 2026. A consortium led by MAM with UniSuper and Pontegadea (Amancio Ortega’s investment vehicle) bid A$11.6 billion in enterprise value at A$5.20 per share, a 28 per cent premium. The Qube board has unanimously recommended the deal and the shareholder vote is expected around June 2026. If it closes, MAM picks up Australia’s largest port and rail logistics platform, the kind of trophy infrastructure asset that grows fee-paying AUM for decades and rarely changes hands.
Neither of these flow through cleanly to the FY27 or FY28 earnings line because they sit above the line as realisation gains and AUM growth rather than recurring earnings. Reasonable people can disagree on how much credit to give to one-off realisations, but writing them out entirely is also a choice. We prefer to credit them as one-time uplifts rather than as a re-rate trigger.
FY25 baseline and what the segments are actually doing
Macquarie reported FY25 net profit of A$3,715 million on 9 May 2025, up 5 per cent year on year. The segment splits tell the story.
Macquarie Asset Management lifted profit 33 per cent to A$1,610 million on the back of green-investments performance fees and AUM growth to A$941 billion. Banking and Financial Services grew 11 per cent to A$1,380 million on Australian mortgage and deposit growth. Commodities and Global Markets fell 12 per cent to A$2,829 million as energy volatility normalised after the post-2022 windfall. Macquarie Capital was broadly flat at A$1,043 million.
The mix shift matters. CGM has been doing the heavy lifting for three years. As that segment normalises, the question is whether MAM and BFS can grow fast enough to absorb the drag. We do not think the answer is yes, not on a 12 to 18 month view. The bull rebuttal is that Aligned and Qube are exactly the catalysts that bridge the gap. Fair point. We just do not think that gap is small enough to bridge before the multiple has to compress.
The valuation pressure point
The 24 times forward P/E is the single hardest fact to argue with. Macquarie has not sustained that multiple at any point in the past decade. Its average has been closer to 16 times. Even on the most generous earnings assumption, the stock is now pricing in a meaningful re-rate that has to be earned. If the FY26 result on 8 May 2026 prints in line with consensus rather than ahead, the multiple compression could be sharp.
For context on what is happening around it, the Big Four banks are running well behind MQG year to date. CBA is up about 12.4 per cent, ANZ about 4.5 per cent, NAB about 2.8 per cent and Westpac about 2.4 per cent. Macquarie’s one-month move alone has been larger than all of those YTD figures. That is the kind of dispersion that catches the eye of risk managers on both sides of the trade.
Catalysts ahead
The next two months are dense with read-throughs. FY26 full-year result is scheduled for Friday 8 May 2026. That is management’s chance to either validate the rally or hand the bears the win. The Qube shareholder vote is expected around June 2026. The Aligned Data Centers transaction is targeted to close in the first half of 2026, which would deliver realisation gains into the FY26 numbers if timing aligns. Each of those three events could move the stock 5 to 10 per cent on its own.
Risks to our view
The two biggest risks for anyone short or underweight here are a strong FY26 print and an early Aligned close. If MAM performance fees come in well above consensus on the back of green-investments and infrastructure carry, the FY28 cuts that anchor our model start to look stale. A surprise dividend lift or buyback announcement at the result would also reset sentiment quickly. And while AUD strength is a real earnings headwind, it is also the kind of variable that can reverse on a single Fed meeting.
Our View
We think the valuation is the problem. A 55 per cent premium to ten-year average multiples is not a level you defend with anything other than a clear earnings step-up, and the macro backdrop does not support that step-up over the next 12 to 18 months. We do not love calling tops on quality businesses and Macquarie is unquestionably one. But buying after a 21 per cent one-month rally into softening segment earnings, with a price-to-earnings multiple last seen in the depths of zero-rate exuberance, is a poor risk-reward. Our view is sell, with fair value closer to A$218.
For investors already long, the FY26 result on 8 May is the obvious decision point. If management can show the recovery in CGM is stabilising and MAM’s realisation pipeline is converting on schedule, the bear case weakens materially. If the result is in line and the outlook commentary is cautious, the thesis gets early validation. Either way, sitting through the print at 24 times forward earnings without a hedge is the part of the position that needs the most thought.
If you would like to talk to us about how to think about Macquarie in the context of your broader portfolio, get in touch through the callback form or call 1300 889 603. The above is general advice and does not consider your individual circumstances. Past performance is not a reliable indicator of future returns.
