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Should I take profit on Aussie Broadband (ABB)?

Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

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Should I take profit on Aussie Broadband (ABB)?

Glad I took up the two year offer MM team! I've been interested in Aussie Broadband (ABB) for a while and after your positive note on the business at the end of July, I bought in at $2.84. It is now more than 30% up and question is if you have a take profit target or is this one for the long haul?

Nathan

Answer

Hi Nathan,

ABB soared this week to fresh highs following the announcement of a 5-year deal with Telstra Wholesale which looks set to deliver ABB a $1m pa saving for FY22 and a mammoth $15m from FY23 onwards. This alliance positions the company nicely to expand its business presence while also providing the opportunity to develop its white label and residential areas.

If we compare with it’s more widely held peer which is Uniti Group (UWL), UWL has also hit all-time highs however ABB trades on about half the earnings multiple, so is still attractive from a relative valuation standpoint.

We like the way ABB is moving forward with the risk / reward appealing in the $3.50-3.60 region.

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Aussie Broadband (ABB)
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