2 excellent ASX tech shares tipped for big things

These tech shares could be in the buy zone…

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The tech sector is home to a number of companies with strong growth potential.

Two that are highly rated are listed below. Here’s what you need to know about these tech shares:

Adore Beauty Group Limited (ASX: ABY)

The first tech share to consider is Australia’s leading online beauty retailer, Adore Beauty.

Though, calling it just an online beauty retailer is a bit of a disservice as it is so much more. Since launching in 2000, Adore Beauty has evolved into an integrated content, marketing and e-commerce retail platform that partners with a broad and diverse portfolio of approximately 260 brands and 10,800 products.

It has been growing strongly over the last few years and this has continued in FY 2022. Adore Beauty released its first quarter update last week and reported a 25% increase in revenue to $63.8 million. This was underpinned by a 24% jump in active customers to 874,000 and returning customer growth of 63%.

Positively, even when annualised, this is just a fraction of the beauty and personal care (BPC) market in Australia which is estimated to be worth $11.2 billion. Furthermore, it is expected to grow at a 26% CAGR through to 2024.

Morgan Stanley is a fan of the company. It currently has an overweight rating and $6.00 price target on its shares.

Nitro Software Ltd (ASX: NTO)

Another ASX tech share to look at is Nitro Software. It is a software company that is aiming to drive digital transformation in organisations around the world with its Nitro Productivity Suite. The Nitro Productivity Suite provides integrated PDF productivity and electronic signature tools to customers through a horizontal, software-as-a-service, and desktop-based software solution.

In FY 2021, Nitro is aiming for annualised recurring revenue (ARR) of between US$39 million and US$42 million. This will be up strongly year on year but still well short of its total addressable market which is estimated to be $28 billion.

The team at UBS are very positive on Nitro. Last week they initiated coverage on the company with a buy rating and $4.70 price target. The broker believes Nitro’s ARR could surpass US$100 million by FY 2024.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Nitro Software Limited. 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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