Given the quality on offer in the tech sector, it isn’t surprising that tech shares are among the most popular shares on the ASX.
But given the abundance of choice that investors have, it can be difficult to decide which ones to buy over others.
To help narrow things down for you, I have picked out two ASX tech shares which are very highly rated right now:
Nitro Software Ltd (ASX: NTO)
Nitro Software is a software company which is aiming to drive digital transformation in organisations around the world across multiple industries.
Its core solution is the Nitro Productivity Suite, which provides integrated PDF productivity, eSignature, and business intelligence (BI) tools to customers. Management notes that its software solution is highly scalable, serving large multinational enterprises and government agencies, as well as small businesses and individual users.
This week Nitro released its fourth quarter update and revealed that its annualised recurring revenue (ARR) reached US$27.7 million. This was up 64% on the prior corresponding period and was ahead of its upgraded guidance.
It also revealed that it now serves 11,700 business customers, including 68% of the Fortune 500, and saw over 1 million Nitro Sign eSignature requests sent during the year.
Analysts at Morgan Stanley are positive on Nitro and have an overweight rating and $3.50 price target on its shares.
Xero Limited (ASX: XRO)
Another ASX tech share to look at is Xero. It is a leading cloud-based business and accounting software provider.
Thanks to its highly successful evolution from an accounting platform to a full service small business solution, Xero has been growing at a rapid rate in recent years.
Pleasingly, this has continued in FY 2021, even during the pandemic. In the first half of FY 2021, Xero reported a 21% increase in operating revenue to NZ$409.8 million and a 15% lift in annualised monthly recurring revenue (AMRR) to NZ$877.6 million. It also grew its subscribers to 2.45 million.
Analysts at Goldman Sachs believe Xero’s growth is only just starting. Thanks to the quality of its offering, the shift to the cloud, its global market opportunity, and burgeoning app ecosystem, it believes Xero is capable of delivering multi-decade strong revenue growth.
In the meantime, Goldman Sachs believes Xero can achieve a subscriber footprint of 7.4 million and generate NZ$3.4 billion in annual revenue by 2030.
In light of this, the broker has a buy rating and $157.00 price target on its shares.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.