Megaport (ASX:MP1) share price charges higher on bullish broker note

Here's why a leading broker likes this tech share…

| More on:
A man is connected via his laptop or smart phone using cloud tech, indicating share price movement for ASX tech shares and asx tech shares

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Megaport Ltd (ASX: MP1) share price was a positive performer again on Thursday.

The elasticity connectivity and network services interconnection provider's shares finished the day almost 1% higher at $17.71.

This means the Megaport's are up nearly 4% over the last three trading sessions.

Why is the Megaport share price rising this week?

The catalyst for the rise in the Megaport share price this week has been a broker note out of Citi.

According to the note, the broker has initiated coverage on the company's shares with a buy rating and $20.00 price target.

Based on the current Megaport share price, this implies potential upside of 13% even after its gains this week.

What did the broker say?

Citi is feeling bullish on the Megaport share price due to its belief that the company is well-positioned to deliver very strong revenue growth in the coming years.

And while it acknowledges that its shares are not cheap, it believes its growth profile justifies the premium.

Citi explained: "We see Megaport as a play on multiple trends, specifically increasing multi-cloud adoption, and infrastructure and computing getting more distributed as well as increasing digitisation. The recent introduction of Megaport Virtual Edge (MVE) expands Megaport's addressable market, which along with push to leverage channel partners to go to market is expected to deliver strong growth over the medium-term."

"At 23x FY22e revenue (CitiE), we acknowledge that a lot of the growth is priced in, however with a forecast 3 year revenue CAGR of 40%+ and operating leverage expected to deliver software like margins (CitiE: long term EBITDA margins of 50%), we still see upside to current levels. One risk to consider is that MVE could take longer to gain traction given a more complex sale and dependency on SD-WAN partners," it added.

Overall, the Megaport share price may be up 25% in 2021, but this broker doesn't believe it is too late to invest.

Should you invest $1,000 in Megaport right now?

Before you buy Megaport shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Megaport wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

A bland looking man in a brown suit opens his jacket to reveal a red and gold superhero dollar symbol on his chest.
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in May

These stocks could be best buys this month according to the broker.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Man looking upwards contemplating which shares to buy
Broker Notes

CSL shares have climbed 10% since 11 April. Is it too late to buy?

What are analysts saying about this biotech giant after its recent rally? Let's find out.

Read more »

Excited couple celebrating success while looking at smartphone.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in May

The broker is feeling bullish on these names this month. Let's find out why.

Read more »

Red buy button on an apple keyboard with a finger on it representing asx tech shares to buy today
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Share Market News

ASX shares in April: 8 key takeaways according to Macquarie

Here are eight key takeaways from April, according to a new note from the broker.

Read more »

A shocked man holding some documents in the living room.
Broker Notes

Macquarie's take on Judo Capital shares after suddenly falling 19% yesterday?

Judo Bank was the ASX's top-performing banking stock in 2024.

Read more »