Aussie Broadband stock price target raised to AUD6.00 from AUD4.65 at UBS

UBS has raised its price target for Aussie Broadband (ASX:ABB) to AUD6.00 from AUD4.65, maintaining a Buy rating, following a significant six-year wholesale agreement with MORE Telecom. This contract is set to migrate approximately 290,000 subscribers to ABB's platform, expected to generate an incremental AUD12 million in EBITDA by fiscal year 2027 and an estimated 12% accretion to ABB's fiscal year 2025 earnings per share, despite competitive per-subscriber pricing. UBS views the transaction as overwhelmingly positive for Aussie Broadband's financial outlook.

Analysis

UBS has materially upgraded its outlook on Aussie Broadband (ASX:ABB), raising its price target by nearly 30% to AUD6.00 from AUD4.65 while reiterating a Buy rating. The primary catalyst for this revision is a new six-year wholesale agreement with MORE Telecom, which is expected to be significantly value-accretive. This deal will see approximately 290,000 subscribers migrate to ABB's platform, projecting an incremental AUD12 million in EBITDA by fiscal year 2027. Despite what UBS notes as competitive pricing—around AUD3 per subscriber per month on an EBITDA basis—the transaction is estimated to be 12% accretive to ABB's fiscal year 2025 earnings per share. The deal's structure involves a non-cash component, with ABB providing 5.88 million shares valued at AUD24.6 million to MORE Telecom, alongside future cash milestone payments. Concurrently, ABB will divest its Buddy brand to MORE for approximately AUD8 million. The full subscriber migration is slated for completion by the end of fiscal year 2026, solidifying a long-term revenue stream and prompting UBS to label the transaction 'overwhelmingly positive'.

Key Decisions for Investors

• Given the strong endorsement from UBS, the significant price target increase, and the projected 12% EPS accretion for FY2025, this development strongly supports a bullish thesis on Aussie Broadband.
• Investors should model the financial impact with the understanding that the full benefits, including the AUD12 million incremental EBITDA, will be phased in through the end of fiscal year 2026.
• The issuance of 5.88 million shares as part of the transaction introduces a dilutive factor that must be weighed against the deal's accretive earnings potential.
• Monitor the company's execution on migrating the 290,000 subscribers, as the pace and success of this process will be a key determinant in realizing the deal's forecast value.