Insights

2 beaten down ASX tech shares that analysts rate as buys

These beaten down tech shares could be buys…
The post 2 beaten down ASX tech shares that analysts rate as buys appeared first on The Motley Fool Australia. –

It is fair to say that it has been a very disappointing year for the tech sector. But every cloud has a silver lining. On this occasion, that silver lining is the attractive levels that some tech shares have been dragged down to.

For example, the two ASX tech shares listed below have been hammered this year despite continuing their strong growth. Here’s why analysts think this could be a buying opportunity for investors:

TechnologyOne Ltd (ASX: TNE)

TechnologyOne is an enterprise software provider servicing the government, financial services, health and community services, education, and utilities and managed services markets. Its shares are down 19% year to date.

This is despite TechnologyOne releasing its half year results last month and reporting a 19% increase in total revenue to $172.5 million and a 23% jump in annual recurring revenue (ARR) to $288.5 million.

Pleasingly, management also reiterated its confidence that it will grow its ARR to $500 million by FY 2026. This is being underpinned by its transition to a software-as-a-service (SaaS) business model and its growing UK business.

The latter more than doubled its profit during the first half and still has a huge runway for growth in a market many times larger than the ANZ market.

Analysts at Goldman Sachs suspect that TechnologyOne could even outperform its ARR target, noting that the risks “are skewed to the upside.”

Goldman has a buy rating and $13.30 price target on the company’s shares.

Xero Limited (ASX: XRO)

Xero is a cloud-based accounting solution platform provider to small and medium sized businesses globally. Its shares are down 45% since the start of the year.

This is despite Xero recently releasing its FY 2022 results and revealing a 28% jump in annualised monthly recurring revenue (AMRR) to NZ$1.2 billion thanks partly to a 19% increase in total subscribers to 3.3 million.

Furthermore, the company’s long term growth prospects remain as positive as ever. For example, Goldman Sachs is forecasting a 26.5% increase in revenue to NZ$1.387.1 billion in FY 2023. After which, it expects Xero’s revenue to increase to almost NZ$2 billion by FY 2025.

Beyond that, Goldman has previously stated its belief that Xero has the potential to deliver strong multi-decade growth.

In light of this, it will come as no surprise to learn that its analysts have a buy rating and $118.00 price target on its shares.

The post 2 beaten down ASX tech shares that analysts rate as buys appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More reading

Why Codan, Incitec Pivot, Xero, and Zip shares are dropping
Down 13% in a month, fundie says Xero share price is ‘very reasonable’
3 ASX shares to buy now (and one bonus): fund manager
2 stellar ASX growth shares analysts are tipping as buys this month
Analysts name 2 high quality ASX blue chip shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended TechnologyOne Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here To Get Started
FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here For More Info