There are some ASX shares that plenty of brokers like at the moment.
Everyone has a different opinion about each business. But if multiple analysts like the same company then it could be an opportunity:
Steadfast Group Ltd (ASX: SDF)
Steadfast Group says it’s the largest general insurance broker network and the largest group of insurance underwriting agencies in Australasia, with growing operations in Asia and Europe.
It has a broker network that get better market access, exclusive products and services through the Steadfast Group. Steadfast has underwriting agencies that designs, develops and provides specialised insurance products and services to brokers inside and outside of Steadfast. Steadfast also has a number of complementary and supporting businesses for insurance like technology, risk, life insurance, reinsurance and lawyers.
Steadfast is currently rated as a buy by at least four brokers, including Credit Suisse which has a price target on Steadfast of $4.60. It noted the recent profit upgrade.
In that upgrade, the ASX share increased its earnings expectations after a “strong” first nine months of FY21 with revenue growth of 7.2% and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 20.5%.
After good organic growth and accretive acquisitions, Steadfast said that it’s expecting underlying net profit after tax (NPAT) to come in a range of $127 million to $132 million – that guidance was increased from a range of $120 million to $127 million. Underlying earnings per share (EPS) is expected to grow by 15% to 20%.
Steadfast said that strategic partners continue to implement moderate premium price increases.
FINEOS Corporation Holdings PLC (ASX: FCL)
FINEOS is an ASX software share that provides software to the employee benefits and life, accident and health industry. It says that it helps customers upgrade from outdated legacy administration systems to a modern purpose-built, customer-centric product-suite. It enables improved operational efficiency, increased effectiveness and excellent customer care.
It’s currently rated as a buy by at least three brokers, including the ones at Macquarie Group Ltd (ASX: MQG) that have a price target of $4.63 on FINEOS. That suggests a possible upside of over 20% over the next 12 months. Macquarie thinks that FINEOS can claim more wins which could help.
In the quarter ending 31 March 2021, it revealed that FY21 total revenue is on track to hit the upper end of its guidance range of $102 million to $105 million and achieve the targeted 30% growth in subscription revenue (before the contribution from the Limelight acquisition).
Since that quarterly update, the ASX share announced the acquisition of Spraoi for an upfront US$4 million and an earnout of up to US$6.6 million. Spraoi is a leading provider of machine learning capabilities for the employee benefits and life industry. It currently has eight clients and achieved US$6 million of revenue in the year to 31 December 2020 and is expected to be earnings accretive to FINEOS, excluding transaction costs, after its first full year.
FINEOS is excited by this acquisition because it gives it immediate opportunities to leverage from its existing client base and product capabilities.