Concerns about inflation, interest rates, and valuations have put a lot of pressure on the tech sector this year. While this is disappointing, it does appear to have dragged a good number of tech shares down to very attractive levels.
When the dust finally settles, here’s why these ASX tech shares could be the ones to buy:
The Afterpay share price is currently trading at $84.50. This means the buy now pay later (BNPL) focused payments company’s shares are now down 47% from their 52-week high of $160.05.
While the company’s shares are certainly at the high end of the risk scale due to the enormous amount of future growth that is already being priced in, Afterpay does appear well-placed to deliver on expectations.
This is due to the increasing popularity of BNPL with both consumers and merchants. In respect to the former, Afterpay has been growing its global customer numbers at a rapid rate over the last few years. This has been complemented by a significant increase in repeat usage.
The good news is that Afterpay looks well-placed to continue its growth for the foreseeable future. This is due to its ongoing international expansion and new product launches. The latter will see the company release banking products via the Afterpay Money app in the near future.
Last week Morgan Stanley put an overweight rating and $149.00 price target on the company’s shares.
Altium Limited (ASX: ALU)
Another ASX share to consider when the dust settles is this leading electronic design software provider. The Altium share price is currently trading at $23.99, which is down 40% from its 52-week high of $40.21.
This could be a buying opportunity for patient investors due to the company’s strong long term growth potential. This positive outlook is thanks to its exposure to the rapidly growing Internet of Things and artificial intelligence markets. As these markets are underpinning an explosion of electronic devices globally, demand for its key Altium Designer and 365 platforms look set to increase materially over the next decade.
But Altium isn’t a one trick pony. It also has other businesses with positive outlooks as well. These are its workflow solution platform NEXUS and electronic parts search engine Octopart. Both are supporting Altium’s growth and have sizeable market opportunities of their own. A testament to the quality of the NEXUS platform is that it counts Tesla and SpaceX as customers.
Management is positive on the future. Due to favourable industry tailwinds and its leadership position, it is targeting revenue of US$500 million by FY 2025/26. This will be more than double what it expects to achieve in FY 2021.
Analysts at Citi are positive on the company and have a buy rating and $33.50 price target on its shares.