The Megaport share price just tumbled another 10%. Is it now a super bargain?

Is now an opportune time to grab Megaport shares?

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The Megaport Ltd (ASX: MP1) share price has been thrown from pillar to post over the past week. For shareholders, it means this year’s pain has worsened as investors try to recalibrate their valuation of the company.

On a second day of bitter losses, shares in the cloud interconnectivity company are down 9.79% to $9.03. Although, the Megaport share price traded as low as $8.58 apiece earlier today. Yesterday, its shares fell by more than 21%.

The sustained rough patch means the company’s shares are now down 53% since the beginning of the year.

Is the Megaport share price a steal or steer clear?

Firstly, before we dive into whether analysts are bullish or bearish on Megaport, let’s recap Thursday’s quarterly update. The announced figures, while demonstrating growth, were below what many experts had been expecting.

  • Quarterly revenue up 42.5% from the prior corresponding period to $27.9 million
  • Customers increased 20% to 2,541 year on year
  • Average revenue per port up 9.4% to $1,049
  • Cash position fell 37% to $88.8 million at the end of March 2022 compared to previous year

At face value, these numbers suggest strong growth in the top line. However, ASX-listed Megaport has some large shoes to fill with its market capitalisation of $1.43 billion even after its recent reduction. Evidently, this has plagued the minds of shareholders over the last couple of days.

Despite the high level of pessimism surrounding the Megaport share price, analysts over at UBS are adamant there’s still long-term potential.

In a note to clients, UBS analysts stated:

We remain positive on the medium to long-term opportunity for MP1. That said, it is hard to disagree that some of the accelerators to growth are taking longer than anticipated to come through, which in our view pushes out the earnings potential (rather than reducing it).

Likewise, a note from Citi indicates the equity team remains bullish on the Megaport share price in the longer term. Though, the disappointing quarterly update triggered a cut in their price target to $16.60.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns 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.

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