Is this the best small cap ASX share to buy now?

Is Nitro Software Ltd (ASX:NTO) the best small cap ASX share to buy right now?

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Are you a fan of small cap shares? If you are, then you might want to take a look at the one listed below.

This small cap is growing very quickly and has been tipped to have bright futures. Here’s what you need to know about it:

Nitro Software Ltd (ASX: NTO)

Nitro Software is a growing software company that is helping to drive digital transformation in businesses around the world.

The company’s key solution is the Nitro Productivity Suite. It provides integrated PDF productivity, eSignature, and business intelligence tools to customers via a horizontal, software-as-a-service and desktop-based software suite.

Management notes that its software is highly scalable, serving large multinational enterprises and government agencies, as well as small businesses and individual users.

At the last count, the company had sold over 2.6 million licenses and had 11,700 Business Customers across 154 countries. Among these are 68% of the 2019 Fortune 500 and three of the 2019 Fortune 10.

FY 2020 performance

Last month Nitro released its full year results and revealed annual recurring revenue (ARR) of $27.7 million. This was up 64% year on year and ahead of its upgraded guidance range of $26 million to $27 million.

Positively, another strong performance is expected in FY 2021.

With its results, management provided FY 2021 ARR guidance of be between $39 million and $42 million. This will mean year on year growth of between 41% and 51.6% in FY 2021.

Is the Nitro share price in the buy zone?

According to analysts at Morgan Stanley, the Nitro share price is in the buy zone right now. Earlier this month, the broker retained its overweight rating and lifted its price target to $3.70.

Based on the latest Nitro share price of $2.55, this implies potential upside of 45% over the next 12 months.

Morgan Stanley believes management’s guidance is conservative and sees scope for the company to outperform it.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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