Megaport Shares (ASX: MP1) Extend Recent Rally – What is Behind The Move?

Megaport shares (ASX: MP1) have ended the week with the rally continuing, up 4.28% on the day, and more than 90% up from January’s lows. MP1 has emerged as one of the standout performers on the Australian Securities Exchange in 2025, with prices soaring 73.85% year-to-date. This eye-catching rally has not only captured the attention of institutional investors and analysts but also sparked renewed interest in the broader Network as a Service (NaaS) sector. Despite the recent rally, the share price continues to trade ~12% lower than 12 months ago, telling a tale of two halves. So, what’s behind Megaport’s turnaround story, and how sustainable is the rally?

At the heart of Megaport’s share price surge is a fundamental shift in its financial profile. For the first time in its history, the company achieved full-year net profit after tax in fiscal 2024—a milestone that marks its transition from a high-growth disruptor to a profitable, cash-generating enterprise. This profitability milestone is more than symbolic: it signals that Megaport’s business model, which focuses on providing flexible, scalable networking solutions to enterprises and cloud providers, is not only gaining traction but also delivering tangible financial returns.

The company’s EBITDA for the period stood at $36.33 million, with an impressive EBITDA margin of 21.49%. Morningstar projects that Megaport’s revenue will continue to grow at a compound annual growth rate of 10% over the next decade, driven by its entrenched customer base and the accelerating global trend toward cloud adoption and digital transformation. The company’s solid balance sheet, including a net cash position of $61 million at the end of FY24, further enhances its ability to invest in growth initiatives and weather potential market turbulence.

Another factor underpinning Megaport’s stellar share price performance is robust institutional support. With 66.40% of shares held by institutional investors, the company benefits from a deep pool of sophisticated capital and long-term support. Notably, Megaport has also embarked on share buybacks, reducing its outstanding share count by 16.71% year-over-year and a staggering 49.01% quarter-over-quarter. These buybacks not only signal management’s confidence in the company’s intrinsic value but also enhance per-share metrics, providing an additional tailwind for the stock.

Megaport’s core value proposition is its global Software Defined Network (SDN), which enables businesses to connect seamlessly to major cloud platforms such as AWS, Microsoft Azure, and Google Cloud. As enterprises accelerate their digital transformation journeys and demand more agile, cost-effective networking solutions, Megaport’s NaaS platform is uniquely positioned to capture this secular shift. The company’s ongoing investments in its platform and strategic partnerships continue to drive customer acquisition and retention, supporting its long-term growth narrative.

Looking to analysts, and the consensus price target of $12.07 remains below the current price action, such has been the pace of growth in recent months.

While some short-term caution may be warranted given the stock’s rapid ascent and mixed technical signals, the longer-term bull case for Megaport remains solid, especially for those seeking exposure to the digital infrastructure backbone of the future.