Megaport Limited: It’s all tracking in line with the grand plan

About the author:

Author name:

By Nick Harris

Job title:

Senior Analyst

Date posted:

27 October 2023, 7:30 AM

Sectors Covered:

Telecommunications, Technology

• Megaport Limited's (ASX:MP1) 1Q24 financial accounts were above our expectations while Key Performance Indicators (KPIs) were slightly weaker than we anticipated.
• Management have gone to lengths to explain that FY24 is a rebuild year. Hitting guidance is largely around costs which are comfortably under control. The second lever in FY24 is rebuilding the sales structure and hiring new sales. This is mostly done and, all going to plan, should deliver an accelerate sales KPIs in 4Q24.
• This isn’t new news so it’s a little surprising the share price dropped materially on MP1’s 1Q24 result. Sales KPIs were unlikely to look good in this quarter and are likely to remain anaemic over the next 2-3 quarters. We think management are doing all the right things and reminding shareholders that real progress takes time.
• Our $13 valuation is unchanged but we now set our Target Price at (login to view) and retain our Hold recommendation. We see value at current levels but think, as we did prior to today’s result, that the investment community will need to see signs of sales accelerating for the next leg of share price appreciation.

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