Australia's Megaport rises; Citi maintains 'buy' stance on data centre surge

Megaport

20/01/2025 02:32

** Shares of connectivity solutions provider Megaport
 MP1.AX  rise 3.7% to A$7.8, their highest levels since Dec 19,
2024
    ** Citi says co's expansion catalysts, including new data
centres (DC), product launches, and FX tailwinds, are poised to
counterbalance any possible adverse effects of price cuts
    ** Brokerage sees FY26e growth potentially surpassing
forecasts due to co's strategies like offering year-long free
terms to capture clientele, surge in demand for larger DC
networking products and inputs anticipated from new DC sites and
partnerships
    ** Says that despite a rise in workforce and subsequent cost
inflation, Citi expects unchanged EBITDA margins for FY26e,
crediting it to amplified investment in product development to
tackle the net revenue retention deceleration
    ** Maintains "buy" rating, with a target price of A$9/share
    ** Stock rose as much as 4.3% earlier in the day, set for
its three consecutive sessions of gains
    ** Seven of 14 analysts rate the stock "buy" or higher, with
the other seven as "hold"; their median PT is A$9.73 – LSEG data
    ** Stock dropped ~20% in value in 2024 

    ($1 = 1.6119 Australian dollars)

 (Reporting by Kumar Tanishk in Bengaluru)
 ((Tanishk.Kumar@thomsonreuters.com;))