Brokers are constantly looking for opportunities and this article is about two ASX tech shares that are buy-rated.
Technology businesses are able to grow quickly and achieve relatively high profit margins because of the low cost nature of software.
Here are two ASX tech shares that brokers like right now:
Hub24 Ltd (ASX: HUB)
Hub24 is one of the leading financial technology businesses on the ASX with a market capitalisation of around $1.9 billion.
It has the Hub24 platform and HUBconnect business offerings. The platform offers advisers and their clients a range of investment options, such as managed portfolio solutions and extensive transaction and reporting functionality.
There are at least four brokers that like Hub24 at this share price, including Credit Suisse which rates the ASX tech share as a buy with a price target of $31.50. The broker points to a stronger profit outlook and a confidence that Hub24 will see profit increase from higher interest rates in the future.
In April 2021, Hub24 revealed that it achieved record quarterly net inflows of $1.9 billion in the three months to 31 March 2021, which was an increase of 41% year on year and $0.2 billion higher than last quarter.
Total funds under administration (FUA) reached $51.4 billion, including Xplore Wealth which contributed $17.2 billion as at 31 March 2021, with platform FUA of $35.6 billion as at 31 March 2021 (up 136% year on year).
In the FY21 half-year result the ASX tech share’s achieved platform segment revenue growth of 25% to $43.8 million, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 41% to $16.4 million and underlying net profit after tax (NPAT) after tax growth of 39% to $7.5 million.
Nextdc Ltd (ASX: NXT)
Nextdc is a data centre business. Its pitch is that it’s building the infrastructure platform for the digital economy, delivering the critical power, security and connectivity for global cloud computing providers, enterprise and government.
Its cloud centre partner ecosystem is a large digital marketplace, comprising more than 600 carriers, cloud providers and IT service providers, enabling local and international customers to source and connect with cloud platforms, service providers and vendors.
Nextdc is achieving growth in financial terms. In the first half of FY21, it saw data centre revenue rise 27% to $121.6 million. Underlying EBITDA grew 29% to $14.9 million and operating cashflow went up 219% to $44 million.
The ASX tech share’s operational numbers continue to grow as well. For the 12 months to 31 December 2020, contracted utilisation grew 33% to 71MW and the number of customers increased 16% to 1,465.
At the half-year result, it said it was expecting more contract wins in the second half of FY21. It’s expecting underlying EBITDA to be in the range of $130 million to $133 million.