Megaport Ltd (ASX: MP1) shares could be undervalued at current levels.
That's the view of analysts at Macquarie Group Ltd (ASX: MQG), which are feeling bullish on the growing network solutions company.
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What is the broker saying?
Macquarie appears supportive of the company's plan to acquire Latitude.sh for US$150 million. It said:
Latitude.sh is the Megaport for Compute. It offers private, scalable, flexible, global CPU infrastructure. It is not cloud capacity. Cloud infra is multi-tenanted, meaning Hyperscalers share resources across multiple customers. Latitude sells dedicated servers (bare metal). High-egress customers often see bare metal infra saving ~85% on their Total Cost of Ownership (TCO) relative to cloud. This is particularly relevant for use cases like Blockchain nodes and industries such as Media (with streaming), SaaS, Finance and Healthcare (high-traffic applications).
These industries are the high-growth areas in MP1's recent Cloud Network Report, validating call commentary of existing customer demand. As MP1 expands its product portfolio, it can host these products on its newly acquired edge compute, similar to Cloudflare's model.
Furthermore, Macquarie highlights that the deal will be ARR, EBITDA margin, and earnings per share accretive. And while there is higher capital intensity, there will be higher returns in bare metal CPUs.
Outside this, Macquarie points out that Megaport is performing strongly so far in FY 2026. In fact, if it continues this way, it will outperform the market's expectations this year. It said:
Strong trading update (A$160m ARR & NRR expands to 109%). Megaport (MP1) is on track for MRE FY26 ARR of A$295m (VA: A $288m).
Major upside potential
According to the note, the broker has retained its outperform rating and $18.50 price target on Megaport's shares.
Based on its current share price of $15.13, this implies potential upside of 22% for investors over the next 12 months.
To put that into context, a $10,000 investment would be worth over $12,000 by this time next year if Macquarie is on the money with its recommendation.
Commenting on its outperform recommendation, the broker said:
Top-line is stabilised, with new customer logo growth a strong positive signal. Reinvestment in growth will drive top-line acceleration out of FY26. Product roadmap suggests MP1 will move more into software with edge compute, driving higher long-term margins. Retain Outperform.
Valuation: No change to our DCF-based TP of A$18.50. Catalysts: Partnership announcements, deal wins, product launches, AGM.
