The Aussie Broadband Ltd (ASX: ABB) share price has stormed 19% higher since the company released its FY25 financial results on Monday morning.
The recent surge has pushed the National Broadband Network (NBN) provider's share price 52.15% higher over the past 12 months.
At the time of writing, the share price is down 0.93% to $5.31 a piece.
The business posted an 18.7% revenue increase to $1,187.1 million and a 14.7% jump in underlying EBITDA to $138.2 million, which was at the top end of its guidance range.
Looking ahead, management expects even more growth in FY26. The company is forecasting an underlying EBITDA of $157 million to $167 million, which represents growth of 14% to 21%.
It's clear that investors are pleased with the result.
But the question now remains: Have Aussie Broadband shares reached a ceiling, or is there more upside to come?
Here's what Macquarie Group Ltd (ASX: MQG) thinks of the stock.
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Aussie boosted by juicy Tangerine deal
In a recent note to investors, the broker confirmed its outperform rating on Aussie Broadband shares and raised its target price to $5.90, up from $5.05 previously.
At the time of writing, this new target price represents a potential 11.1% upside for the shares over the next 12 months.
"We raise our target price by +16.8%, reflecting outer year EPS revisions (from the More/ Tangerine contract win), alongside an update to our view on the appropriate earnings multiple for ABB (See Key Issue analysis above)," Macquarie said in its note.
"Our previous target price ($5.05) implied a P/E of 23.3x on our prior FY27E forecast EPS (21.7cps). Our new target price ($5.90) implies a P/E of 25.5x, on our current FY27E EPS forecast of 23.1cps, implying a +10.4% P/E multiple re-rate (2.2x turns of P/E). We maintain our Outperform rating on ABB."
The broker was positive on Aussie Broadband's FY25 result, and it expects to see further share price upside for the business driven by More/Tangerine earnings.
Aussie Broadband recently secured a six-year wholesale deal with More and Tangerine. Both telcos are backed by Commonwealth Bank.
The deal adds 250,000 broadband connections and will increase Aussie Broadband's NBN base to about 1.04 million services. This is expected to generate $12 million in annual EBITDA from 2027.
Aussie Broadband will issue 5.88m shares to More, subject to escrow.
Macquarie said the Wholesale contract win also creates a tailwind for the business by adding potential for more customers and diversifying the Group.
