Australian Stocks: Megaport Shares Fall as Upgraded Forecast Disappoints

In key news on Australian stocks, Megaport Limited (AU:MP1) shares fell by 3% as of writing, after the company’s upgraded earnings and revenue forecast for FY24 disappointed investors. The company announced its Q3 results, delivering solid performance. Consequently, it raised its FY24 EBITDA guidance to a range of AU$56 million and AU$58 million, surpassing the earlier forecast of AU$51 million and AU$57 million. Moreover, full-year revenue is now expected in the range of AU$190 million to AU$195 million, representing a growth of 24% to 27% compared to the previous year.

Despite positive Q3 numbers and upgraded FY24 guidance, it appears that the market had anticipated an even more robust outlook. Citi analysts called the forecast “conservative,” which failed to meet investors’ expectations.

Megaport is a leading software-defined networking (SDN) company, that directly connects enterprises, networks, and services.

Highlights from Megaport’s Q3 Results

Megaport reported revenue of AU$49.5 million for Q3 FY23, marking a 30% year-over-year increase. Annual recurring revenue (ARR) increased to AU$199 million compared to AU$192 million at the end of the Fiscal second quarter. EBITDA grew by a solid 92% to AU$14 million compared to the prior-year quarter. However, earnings were down by 7% compared to the previous quarter due to higher spending on revitalizing the go-to-market strategy and increased partner commissions.

Meanwhile, Megaport’s net cash flow for the three months amounted to AU$13.4 million, marking a significant improvement from a cash outflow of AU$8.5 million in the same period last year.

Is Megaport a Good Buy?

According to TipRanks’ consensus forecast, MP1 stock has received a Strong Buy rating based on seven Buy and two Hold recommendations. The Megaport share price forecast is AU$14.56, which is 7.3% above the current trading level.

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