At $127.10 today the Macquarie Group Ltd (ASX: MQG) share price is trading a fair way above the $120 price at which it recently raised a $1 billion from institutional investors.
Retail shareholders have until September 20 to apply for up to $15,000 worth of shares at what will most likely be the same into raising price of $120 per share.
This means the retail raising could be heavily oversubscribed and lead to a scale back given the prospect of instant stag profits on the difference between the issue price and the current market price.
After Macquarie announced the capital raising and provided a trading update on August 28 the analysts at Goldman Sachs took another look at the group's valuation.
Macquarie is now guiding for H1 FY 2020 profit to be around 10% on the prior corresponding half, but its new CEO stuck to guidance for full year profit to be "slightly down" on fiscal 2019.
Goldman's analysts are not as enthusiastic as others about the recent capital raising and flag a couple of concerns.
These include the idea that Macquarie might need the additional capital to meet regulatory requirements and that other "marginal growth" is becoming "increasingly capital intensive".
As a result of its review it revised its "Y20E/21E/22E EPS by +1.3%/-3.5%/-1.7%" lower to produce a $126.44 share price target.
According to the Wall Street Journal analysts have an average $132.17 valuation on Macquarie shares.
In my opinion it still looks a better long-term growth and income bet than the likes of Commonwealth Bank of Australia (ASX: CBA) or Westpac Banking Corp (ASX: WBC).
