Why Megaport shares are rocketing 40% in a month

Megaport Ltd (ASX: MP1) shares are having another strong session on Thursday after the network services company released a fresh update.

At the time of writing, the Megaport share price is up 6.43% to $9.76.

That adds to a much stronger run over the past month, with the stock now up more than 40% over that period.

Here’s what investors are reacting to today.

Guidance stays in place

Megaport’s announcement this morning appeared to give investors a bit more certainty around the year ahead.

The company reaffirmed its FY26 combined group guidance, with revenue still expected to come in between $302 million and $317 million. It is also sticking with an EBITDA guidance of 21% to 24% of revenue, while capex is expected to land between $90 million and $100 million.

The update also follows a better run of news flow from the company. Late last month, Megaport announced a 3-year compute and storage contract worth about $35.4 million. The deal is expected to add around $11.8 million in annualised recurring revenue.

Why investors are taking another look

Megaport helps businesses connect to cloud providers, data centres, and network services through its platform.

Demand for that kind of infrastructure has grown as companies use more cloud services, data, AI workloads, and distributed systems.

Megaport has also expanded beyond its core network business through its acquisition of Latitude.sh. Latitude adds a compute layer to the business, including CPU, GPU, and storage services, giving Megaport a wider offer across network, compute, and storage.

The company said network annual recurring revenue reached $272 million at 31 March, up 23% on a constant currency basis. Compute ARR also rose 31% to US$58.7 million, excluding the recently announced contract.

New security product launched

Megaport also highlighted its new DDoS Protection product in the investor presentation.

DDoS attacks are designed to overwhelm a website, service, or network with large amounts of traffic. Megaport’s product is built to filter that malicious traffic inside its own network, rather than forcing customers to route it through a separate service.

Customers can protect their internet traffic while staying within Megaport’s existing platform.

Foolish Takeaway

Megaport has given investors a few things to work with today.

The reaffirmed guidance has helped settle some nerves, while the recent contract gives the market another reason to watch Latitude.sh.

But after a 40% rally in a month, I would not be rushing in at any price.

I’d rather see the next update and whether the revenue growth is flowing through to earnings.

The post Why Megaport shares are rocketing 40% in a month appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.