It was a very positive day of trade for the Uniti Group Ltd (ASX: UWL) share price on Tuesday.
The telecommunications provider's shares rose 9% to a record high of $2.15 before closing at $2.10..
This means the Uniti share price is now up 20% since the start of the year.
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Why is the Uniti share price surging higher?
Investors were bidding the Uniti share price higher on Tuesday after the release of its half year results. Those results revealed strong growth in revenue, earnings, and free cash flow.
For the six months ended 31 December, Uniti reported a 148% increase in revenue compared to the prior corresponding period to $54.6 million.
Thanks to stronger margins, earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 307% to $29.3 million.
Furthermore, based on its performance in December, Uniti's annualised revenue and EBITDA run-rate was $200 million and $116 million, respectively.
It was a similar story for its free cash flow. Operating free cash flow less capital expenditure was $18.3 million for the half. But at the end of December, its annualised operating free cash flow run-rate was $72 million.
What were the drivers of its growth?
The key drivers of Uniti's growth during the half were a series of acquisitions.
During the period, the company completed three accretive acquisitions. These were OptiComm, Harbour ISP, and the Velocity network assets from Telstra Corporation Ltd (ASX: TLS). Positively, the integration and synergy realisation plans are on or ahead of schedule for these acquisitions.
In addition to this, management notes that all of Uniti's business units are benefiting from various strong tailwinds. These include greater digital services uptake, consumption, technology, strengthening residential property markets, and lifestyle factors. The latter are making fibre broadband an essential service.
While no guidance has been given for the full year, Uniti's Group Managing Director and CEO, Michael Simmons is very positive on the future.
He explained: "The fact that 75% of our existing fully funded, contracted fibre order book will be deployed in the coming 5 years , and is continuing to grow at improving rates, assures our shareholders of continued steep earnings growth and free cash generation over both the near and longer term."
Can the Uniti share price go higher?
Late last month, Bell Potter put a buy rating and $2.20 price target on its shares.
With the Uniti share price now trading within sight of this, the upside may be limited in the short term.
However, Bell Potter is likely to reassess its price target in the coming days after fully digesting the result. This could potentially lead to a higher price target. Investors may want to watch out for that.
