Goldman Sachs says beaten-up Megaport share price has 100% upside

There's optimism on the outlook for the tech company's share price.

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Key points

  • Megaport shares have descended 26% in the past month 
  • Despite this, Goldman analysts are tipping the company's share price to bounce by 107%
  • Analysts sees a $129 billion per year market opportunity for the company 

The Megaport Ltd (ASX: MP1) share price has struggled in the past month, but could it go higher?

Megaport shares are currently trading at $6.31, a 3.37% fall. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.34% in the red today.

Let's check the outlook for Megaport.

Could the Megaport share price recover?

Megaport shares have plummeted 26% in the last month but one global investment firm is predicting a turnaround.

Megaport is a a global connectivity company with more than 700 data centres around the world.

Analysts at Goldman Sachs have rated the Megaport share price as a buy and have placed a $13.10 price target on the company's shares. This represents a 107% upside on the current share price.

The company is tipped to expand rapidly in the future as public cloud adoption and multi-cloud usage increase. Goldman sees Networking as a Service (NaaS) as a key driver of the company's growth in the future.

The broker sees these factors could create a $129 billion per year market opportunity for the company overall.

Megaport reported $27.9 million in revenue in the third quarter of FY22, a 5% or $1.4 million boost on the previous quarter. The company also reported it had $88.8 million of cash available.

Megaport sold 1577 new services in the quarter, up 6% on the previous quarter, to take total services to 25,936. More uptake of multi-cloud connections via the Megaport Cloud Router and Megaport Virtual Edge products contributed to this growth.

Share price snapshot

The Megaport share price has descended 58% in the past year, while it has fallen 66% in the year to date.

For perspective, the ASX 200 has shed more than 1% in the past year.

Megaport has a market capitalisation of $987 million based on its current share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in 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 Scott Phillips.

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