Aussie Broadband Ltd (ASX: ABB) shares have risen more than 100% over the past five years.
Aussie Broadband started out as a fibre broadband provider, focused on increasing broadband coverage to regional Australia. Over time, the company has maintained its existing fibre infrastructure while increasing its focus on reselling broadband from the NBN.
The company has consistently grown its broadband connections in recent periods and increased its market share.
In its most recent half, the company reported a 21% increase in total broadband connections to 785,800 from the prior year. Its NBN broadband market share also increased to 8.3%.
Given this trajectory, do experts see further upside from here? Let's see what one leading broker had to say.
Macquarie initiates coverage
On 27 June, broker Macquarie Group Ltd (ASX: MQG) initiated coverage of Aussie Broadband shares with an outperform rating.
Despite the ASX telecommunications stock rising 10% for the year to date, the broker is bullish on the company's prospects.
Macquarie has placed a price target of $5.05 on the stock. With shares closing at $3.91 yesterday, this suggests 30% upside from here (including both capital growth and dividends).
When issuing this price target, the broker said:
We think ABB is a compelling investment opportunity over FY26-FY28, as the company works towards the 'Strategic Ambitions' that it outlined at its recent Investor Day (April 2025). The key driver of growth for ABB will remain net user adds in its Residential segment, which forms ~49% (FY25E) of gross profit.
Macquarie has forecasted earnings per share (EPS) growth of 36% per annum until FY28.
On the subject of valuation, Macquarie said:
Even after strong share-price performance (+19% YTD), ABB is inexpensive in the context of forecasted EPS growth (FY25-28E: +36% p.a.), with ABB having grown EPS by +36% p.a. (FY21-24) despite raising capital.
As The Motley Fool's Aaron Bell reported yesterday, Bell Potter is also optimistic about Aussie Broadband shares with an overweight recommendation and target price of $4.54.
What about the competition?
Macquarie also noted that Aussie Broadband shares are their preferred pick in the small-caps telecommunications sector.
Macquarie also initiated coverage of fellow telco Superloop Ltd (ASX: SLC) on 27 June with an outperform rating.
The broker assigned Superloop shares a price target of $3.25, suggesting around 8% upside from here.
Comparing the two telcos, Macquarie commented:
Whilst we prefer [Superloop's] product offering and business model to ABB, SLC is more expensive (share price +32% YTD, trading on 12.7x EV/EBITDA vs ABB's 6.6x).
Foolish Takeaway
Macquarie recently initiated coverage on both Superloop and Aussie Broadband shares. While the broker prefers Superloop's business model, it forecasts more upside for Aussie Broadband due to its more attractive valuation. If Macquarie's forecasts materialise, Aussie Broadband investors will be in a significantly better position in 12 months' time.
