Megaport Limited: Mega turnaround!

About the author:

Nick Harris
Author name:
By Nick Harris
Job title:
Senior Analyst
Date posted:
03 May 2023, 8:00 AM
Sectors Covered:
Telecommunications, Technology

  • In our view, Megaport Limited's (ASX:MP1) Q3 result was irrelevant as management’s guidance for FY23 and FY24 was well ahead of consensus expectations. The Q3 result itself was, as expected, weak. The big surprise was FY23 and FY24 Underlying EBITDA guidance, which was 45% and 89% respectively, above consensus. Revenue guidance was not provided but the bulk of the beat came from resetting the cost base.
  • We don’t expect revenue growth to accelerate for ~6 months and despite this we still think MP1 will be FCF+ in FY24. Achievement of guidance should be within management’s control as it’s primarily based on lower operating costs.
  • We retain our Add rating and increase our target price to (login to view).

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