Megaport Ltd (ASX: MP1) shares have been on fire this week.
Over the last two trading sessions, the elastic interconnection services provider’s shares rose as much as 44% to $9.60.
The Megaport share price has started to ease back a touch in late morning trade and now sits at $9.39.
Why are Megaport shares rocketing?
Investors have been scrambling to buy the company’s shares this week after it upgraded its guidance for FY 2023.
Management now expects its normalised earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of $19 million to $21 million in FY 2023. This compares to previous guidance of $16 million to $18 million.
In addition, the company revealed that it was net cash positive in the fourth quarter.
Pleasingly, management advised that it expects this positive cashflow trend to continue in FY 2024 and suspects that it will outperform its earnings guidance for the year.
Is it too late to buy?
A number of analysts remain positive on Megaport shares.
For example, this morning Goldman Sachs retained its buy rating with a new (now surpassed) price target of $9.30.
Elsewhere, Morgans has retained its add rating with an improved price target of $10.00, and UBS has held firm with its buy rating with a new price target of $12.50. The latter suggests that Megaport shares could rise a further 33% from current levels.
UBS was very impressed with the update and believes it points to lower-than-anticipated customer churn following price increases. In addition, the broker feels that the probability of another capital raising has fallen materially. Particularly given its positive cash generation and news that it has terminated its debt facility with HSBC.
All in all, it may not be too late to buy Megaport shares based on what UBS is saying.
