Aussie Broadband Ltd (ASX: ABB) shares are up 10% for the year to date.
That's significantly ahead of the S&P/ASX All Ordinaries Index (ASX: XAO), which has risen 4% over the same period.
The past five years have been a home run for Aussie Broadband investors, with the company's shares up 106%.
But what does the future hold for investors?
Earlier in the week, I reported that broker Macquarie Group Ltd (ASX: MQG) had initiated coverage of Aussie Broadband.
The broker is very optimistic about the ASX All Ords telecommunications company, assigning it an outperform rating and price target of $5.05. That's around 30% upside from here.
Macquarie also initiated coverage of competitor Superloop Ltd (ASX: SLC). After reviewing its most recent trading update, the broker revised its price target for Superloop shares to $3.25.
For valuation reasons, Macquarie continues to prefer Aussie Broadband over Superloop:
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).
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.
What does JP Morgan think?
While Macquarie is very bullish on Aussie Broadband shares, it pays to compare other experts' views.
In February, broker JP Morgan Chase & Co (NYSE: JPM) reviewed Aussie Broadband's half-year results and assigned the company a neutral rating and price target of $3.80.
When issuing this price target, JP Morgan said:
The company has grown its subscriber base strongly in recent periods, in part driven by increased market churn.
We still see a competitive advantage in comparison to the incumbents and expect Aussie Broadband to increase its market share. However, the NBN rollout is now complete and NBN greenfield subscriber growth is slow, impacting Aussie's growth. Competitors may also price aggressively in the market to unprofitably gain share.
JP Morgan has not revised its rating since then.
Evidently, Macquarie is far more optimistic on the stock than JP Morgan.
However, it's worth noting that JP Morgan acknowledged two factors that could generate further upside for Aussie Broadband:
The key upside risks include: (1) Aussie is able to take a greater market share in the Enterprise segment than we are forecasting; and (2) Aussie consolidates the NBN reseller industry at accretive prices.
Other experts
In March, The Motley Fool's Tristan Harrison revealed UBS' price target on Aussie Broadband shares.
After reviewing Aussie Broadband's half-year results, the broker upgraded its price target to $4.80.
Macquarie appears to be the most optimistic of the three brokers.
