The Uniti Group Ltd (ASX: UWL) share price has been a strong performer on Monday morning.
At the time of writing the growing telco company’s shares are up a whopping 19% to $1.85.
Why is the Uniti share price surging higher today?
Investors have been buying the shares of the Telstra Corporation Ltd (ASX: TLS) rival after it upgraded its guidance for the full year.
As recently as December 4 the company revealed that it expected full year underlying EBITDA to be $32 million in FY 2020 on a pro forma basis. This excludes transaction costs associated with recent acquisitions, share-based long term incentive costs, and share based expenses.
The company’s previous forecast assumed increased earnings contributions from recent acquisitions through both organic growth and cost efficiencies realised post acquisition.
Pleasingly, these assumptions proved too modest and the company has outperformed expectations since its last update, leading to an upgrade to its guidance.
Management now expects Uniti to deliver underlying EBITDA of between $17.5 million and $18.5 million for the second half.
Based on this upgraded second half forecast, its underlying FY 2020 EBITDA guidance is now $35 million to $37 million on a pro forma basis. The midpoint of this guidance range represents a hefty 12.5% increase on its prior guidance.
What are the drivers of its guidance upgrade?
According to the release, the primary contributors to the revised forecast are better than expected organic growth in the company’s Wholesale and Infrastructure business.
This has been supported by higher synergies realised in integrating the recently acquired 1300 Australia business into its Specialty Services business unit.
An update on its operating performance for the six months to December 31 and its outlook for the remainder of FY 2020 will be released next week on February 24 when it releases its first half results announcement.
The post Why the shares of this Telstra rival are rocketing 19% higher on Monday appeared first on Motley Fool Australia.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020