2 highly rated ASX tech shares rated as buys

The tech sector is home to a number of quality companies such as the two listed below…

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If you’re looking for shares to buy, then the tech sector could be a great place to start. In this sector there are a number of companies with the potential to grow strongly over the next 10 years.

With that in mind, I have picked out two top tech options to consider. Here’s what you need to know about them:

Life360 Inc (ASX: 360)

The first tech share to look at is Life360. It is the San Francisco-based technology company behind the Life360 mobile app.

This is a market leading app for families, offering features such as communications, driver safety, and location sharing. At the end of March, it had more than 28 million monthly active users globally.

Despite facing headwinds during COVID-19 from lockdowns and lower mobility, Life360 still delivered an impressive 39% increase in normalised revenue to US$81.6 million for the 12 months ending 31 December.

This strong form is expected to continue in FY 2021 as COVID-19 headwinds ease. So much so, management is targeting Annualised Monthly Revenue in the range of US$110 million to US$120 million this year. This will be a 23% to 34% increase year on year.

This could be boosted by the recent acquisition of Jiobit for US$37 million. Management notes that the addition of the wearable location device provider is very supportive of its growth strategy and opens up cross-selling opportunities.

Bell Potter is a fan of the company. The broker currently has a buy rating and $7.00 price target on its shares.

Xero Limited (ASX: XRO)

Another ASX tech share to look at is Xero.

Thanks to the shift to the cloud and its successful evolution into a full-service business and accounting solution, Xero has been growing at a strong rate in recent years.

For example, in FY 2021 the company reported an 18% increase in revenue to NZ$848.8 million. This was driven by a 20% increase in subscribers to 2.74 million. This comprises ANZ subscribers of 1.56 million and International subscribers of 1.18 million.

While this might sound like a large number, it is actually only scratching at the surface of its overall market opportunity. Management estimates that the cloud accounting subscriber total addressable market is currently 45 million.

Goldman Sachs is very positive on Xero’s future. Thanks to its international expansion, the ongoing shift to the cloud, and the monetisation of its app ecosystem, it believes the company could have a multi-decade runway for growth.

Goldman currently has a buy rating and $153.00 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 and has recommended Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Life360, Inc. The Motley Fool Australia owns shares of and has recommended Xero. 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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