Aussie Broadband share price lifts as company spruiks ‘huge opportunity’

The Aussie Broadband Ltd (ASX: ABB) share price is having a strong day.

In afternoon trade, the broadband provider’s shares are up 4% to $2.57.

Why is the Aussie Broadband share price charging higher?

Investors have been buying Aussie Broadband shares on Wednesday following the release of its investor day update.

That update saw management spruik its “huge opportunity to be even bigger than today” and reaffirm its guidance for FY 2023.

In respect to the latter, management continues to expect Aussie Broadband to deliver revenue of $800 million to $840 million. This will be an increase of 46% to 54% from $546.9 million in FY 2022.

The company also reaffirmed its earnings before interest, tax, depreciation and amortisation (EBITDA) margin guidance of 10% to 10.5% for FY 2023. This will be an improvement from 7.2% during the last financial year.

Based on the middle of both its revenue and margin guidance ranges, this implies EBITDA of $84 million for the year. This will be more than double the EBITDA of $39.4 million it recorded in FY 2022.

What about its growth opportunities?

Aussie Broadband highlighted a number of growth opportunities in its investor day presentation.

As well as traditional broadband services (which it is targeting the almost doubling to 1 million services by FY 2025), the company notes that it has the ability to leverage its existing infrastructure to provide more products to its business customers at higher margins.

This includes cloud services, mobility services for Internet of Things, virtual office phones, and 4G and 5G failovers.

In respect to the cloud, the company notes that the Australian cloud infrastructure as a service market is expected to growth from $1.7 billion in FY 2021 to $3.04 billion in FY 2025.

And while major public cloud providers (Amazon, Microsoft, Google, etc.) currently dominate the market, management notes that they can be expensive and are not the best solution in every scenario. This creates an opportunity for Aussie Broadband to win market share.

All in all, management appears confident in its growth trajectory over the coming years. And judging by the Aussie Broadband share price performance today, investors seem to share this confidence.

The post Aussie Broadband share price lifts as company spruiks ‘huge opportunity’ appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• These 10 predictions could help you profit from the stock market regardless of inflation, interest rates or even another bear market
• The Aussie Broadband share price offers 40% upside: expert
• Buy this ASX share that all its directors have been snapping up: expert
• Which ASX 200 shares could benefit from the federal budget?
• Which ASX All Ords shares could perform well in a recession?

Motley Fool contributor James Mickleboro 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 Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/eHpZTWF