Pengana eyes 30% upside in M2 Group

Pengana eyes 30% upside in M2 Group. As a reseller of telephony and data services to medium-sized businesses (under the Commander brand) and through retail channels (Dodo and Primus brands), M2 Group has seen profit growth of 40 per cent a year over the last six years. M2 continues to win market share, predominantly from Telstra Corp, by offering innovative pricing and great customer service. We expect this trend to continue as the rollout of the national broadband network opens up new markets. The company's high-quality management has a relentless focus on cost reduction and, accordingly, profits have been able to grow at a faster rate than revenue. Recent merger and acquisition activity in the sector has added further support to the share price. Our price target of above $11 represents greater than 30 per cent upside from current levels. @pengana