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Brokers cut price targets on Macquarie
September 7, 2010 - 1:04PM

AAP

Shares in Macquarie Group Ltd lost another two per cent in intra-day trading after four brokers cut price targets on the stock following the investment bank's profit warning.

Macquarie's stock was trading down 67 cents, or 1.9 per cent at $34.58 by 1219 AEST, its lowest level since June 4, 2009.

At around 1130 AEST on Tuesday, the shares traded as low as $34.41, down 2.4 per cent on Monday's closing price of $35.25.

The stock is now trading 64.5 per cent lower than its record high of $97.35 reached on May 21, 2007.

Brokers Morgan Stanley, UBS, JPMorgan and Deutsche Bank cut their price targets on the stock on Tuesday after Macquarie on Monday said its first half profit would likely fall by 25 per cent to about $359 million, due to weak market conditions.

Full year profit was anticipated to be "broadly in line" with the $1.05 billion in the previous year, should market activity return to more normal levels in the second half of fiscal 2011, deputy managing director Richard Sheppard told a conference in London.

Macquarie's stock tanked as much as 8.1 per cent on Monday to close down $1.74, or 4.7 per cent, at $35.25.

The selling pressure caused the stock's average recent daily trading volume to double to around $7.6 million shares.

CMC Markets' senior dealer Matt Lewis said Mr Sheppard's comments may have left brokers and investors wondering what "normal levels" of market activity means.

"Does that mean normal conditions as of three years ago? It's hard to quantify what that actually means. I think that may be throwing out broker modelling," he said on Tuesday.

"Some of the markets they traditionally made money in in terms of equity capital markets, IPOs, mergers...a lot of that has been very quiet post GFC (global financial crisis).

"You'd expect that their profits are going to be affected, but 25 per cent is very, very substantial."

The Australian Securities Exchange Group on Monday said new company listings in August numbered just five - relatively flat on last year - and there were 19 de-listings.

2010 AAP