Due to the market's sudden aversion to loss-making tech companies, you won't be surprised to learn that the Megaport Ltd (ASX: MP1) share price has been hammered in 2022.
Since the start of the year, the leading cloud connectivity and networking solutions provider's shares have lost a disappointing 72% of their value.
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Is the Megaport share price weakness a buying opportunity?
While the decline in the Megaport share price is disappointing for shareholders, it could be a buying opportunity for others. In fact, if the team at Goldman Sachs are on the money, there could be some huge gains ahead for investors.
According to a recent note, its analysts have a buy rating and $13.10 price target on the company's shares.
Based on the current Megaport share price of $5.41, this implies potential upside of 140% for investors over the next 12 months.
Why is Goldman bullish?
Goldman is bullish on the Megaport share price due to the company's first-mover advantage in an industry benefiting from long term structural tailwinds. These are the adoption of public cloud (and multi-cloud usage) and the transition towards Networking as a Service (NaaS).
The broker highlights that the latter is being driven by the increased prevalence of hybrid working and cloud-based applications. These are putting strain on legacy network designs and impacting performance. All in all, the broker feels this is providing Megaport with an "immense" growth opportunity.
Goldman explained:
MP1 is benefiting from its first-mover advantage, and two structural tailwinds that accelerated through covid-19, including: (1) The adoption of public cloud & multi-cloud usage; and (2) The growth in Networking as a Service (NaaS).
The opportunity for further growth is immense (GSe A$129bn p.a. spent on fixed enterprise networking across MP1 geographies).
