While Megaport's 2Q revenue and earnings beat consensus expectations by 3% and 25%, respectively, management maintained FY24 guidance, as 2H earnings and net cash flow be impacted by an increased headcount, explains Morgan Stanley.

The broker expects overall cash flow will improve, as management lowered FY24 capex guidance to $20-22m from $28-30m.

Key KPI growth remains muted, according to the analysts, with quarter-on-quarter growth for customers, ports and total services of 1%, 2% and 3%, respectively.

Equal-weight. Target $10.20. Industry View: Attractive.

Sector: Software & Services.

Target price is $10.20.Current Price is $12.48. Difference: ($2.28) - (brackets indicate current price is over target). If MP1 meets the Morgan Stanley target it will return approximately -22% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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