The Uniti (ASX:UWL) share price has surged 7% today. Here’s why

A Bell Potter analyst upgraded his recommendation for Uniti shares this morning.

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Three different hands against a blue backdrop signal thumbs up, indicating share price rise on the ASX market

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Shares in Uniti Group Ltd (ASX: UWL) have spent today firmly in the green, punctuated by an explosive jump in trading around midday. At the market close, the Uniti share price was up 7% trading at $3.36.

Let’s take a closer look at what happened with the telecommunication provider today.

Broker says buy

Bell Potter analyst Chris Savage upgraded his recommendation for Uniti shares this morning, assigning a buy recommendation from a hold rating.

Savage set the price target to $3.60 in the research report on Uniti, raising the target from $3.20.

The broker’s new price target implies an upside potential of 7.5% from the current share price.

Bell Potter believes the company will likely report an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $130 million for FY21, which it believes is the number to watch in the earnings release next month.

On 23 June, analysts at Canaccord Genuity also increased their price target on Uniti shares to $3.70. JP Morgan released a positive equity research report in June as well, outlining the upside potential to the company’s NBN exposure.

These analyst upgrades came after the company was included in the ASX 200 after its reshuffling back in June.

The Uniti share price has climbed 15% since these broker notes, including today’s moves into the green.

Uniti share price snapshot

The company’s share price has outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of 0.8% today.

Today’s gains extend Uniti’s run in the green this year. The Uniti share price has posted a year to date return of almost 96%, building on a 119% 12-month return and outpacing the broad index’s 12-month return of around 22%.

At the current market price, Uniti Group has a market capitalisation of $2.26 billion, and trades at a price-to-earnings ratio (P/E) of 79.

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Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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