Macquarie Bank (MBL) Shares Recommendation

Macquarie Bank (MBL) have a Buy 2 shares recommendation and a share price target of $85 per share from stock analyst UBS. The Qantas Board have announced that it recommends its shareholders accept the $5.60 bid from Airline Partners Australia (APA) led by MBL. MBL will invest $525m for a 14.7% stake (deducted off Tier 2). APA will continue current Qantas strategy with more "patient capital" than the equity markets. Geoff Dixon to remain as CEO of Qantas. APA equity investment of $3.6b compares to QAN's current market cap of $11b, implying significantly more gearing. Cash reserves will be put aside to help financial stability. Given this gearing MBL (& APA investors) are highly leveraged to increased EV of QAN. If APA can increase the EV of QAN by 10% we estimate MBL could generate fees up to $370m in coming periods. UBS sees the following as positives for the deal: (1) International growth and diversification, (2) B/S inventory underpins earnings targets, (3) it is ahead of peers on Specialist Funds experience. Risks: (1) Moving up risk/return curve with bigger positions, (2) Macro factors.

Macquarie Bank Limited is listed on the Australian Stock Exchange (ASX) under stock code MBL. You can view their investor website here. MBL was listed on the ASX on 29 July, 1996. Allan E Moss is the Managing Director Macquarie Bank. MBL is a provider of Investment Banking, Banking and Financial Services. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade MBL. Check your charts and good luck with your share trading!