It was a good day for the TechnologyOne Ltd (ASX: TNE) share price on Thursday.
The enterprise software company’s shares ended the session over 2% higher at $11.87.
This latest gain means the TechnologyOne share price is now up over 40% in 2021.
Why did the TechnologyOne share price push higher today?
Investors were bidding the TechnologyOne share price higher today in response to the release of a positive broker note out of Bell Potter.
According to the note, the broker has retained its buy rating and lifted its price target on the company’s shares to by 8% to $13.50.
Based on the current TechnologyOne share price, this suggests there’s still 14% upside over the next 12 months.
What did the broker say?
The broker has updated its forecasts to reflect the recent acquisition of Scientia. While there are no changes to its FY 2021 estimates, it has upgraded its earnings estimates in FY 2022 and FY 2023 modestly.
Combined with market movements and time creep, this led to the increase in Bell Potter’s price target for the TechnologyOne share price.
Why is Bell Potter bullish?
The note reveals that Bell Potter is expecting a strong full year result from TechnologyOne in November.
It commented: “Technology One has a September year end so will report its FY21 result in late November. The full year result tends to be a catalyst for the share price – and we expect no different this year – as the second half result tends to be stronger both in terms of earnings and cash flow.”
“We forecast a result slightly above the middle of the guidance range but do not rule out a result closer to the top end given the good 1HFY21 result and positive outlook for 2HFY21. We also see the potential for strong SaaS ARR growth above the 35% target provided by the company at the 1HFY21 result,” it added.
Bell Potter has pencilled in a net profit after tax of $73.8 million for FY 2021, up 17.3% year on year.
Positively, it expects this strong form to continue and is forecasting further growth in the years that follow. Its analysts are expecting a net profit of $85.3 million in FY 2022 and then $99 million in FY 2023.
All in all, the broker appears to believe this and its positive longer term growth outlook makes the TechnologyOne share price good value at the current level.