Amid all of this volatility on the ASX share market, there are some businesses on the stock market that are buy-rated by a number of leading brokers.
Analysts and brokers are always on the lookout for opportunities that could be good value and make returns in the medium-to-longer-term.
There’s always a chance that all of the brokers are wrong at the same time, but it could also signify that there’s an opportunity. Here are two that are well-liked at the moment:
EML Payments Ltd (ASX: EML)
EML Payments is a business which provides a payment solutions platform, helping businesses all over the world to “create awesome customer experiences.” It offers a number of services relating to payments, gift cards, virtual cards and so on. EML Payments says it can enable money to be moved quickly, conveniently and securely.
It’s currently rated as a buy by at least three brokers including UBS with a price target of $4.40. That implies the broker thinks the EML share price can rise more than 20% over the next 12 months.
EML shares now don’t seem as risky to the broker after the update from the Central Bank of Ireland (CBI). The broker now thinks that EML can win customers easier and there are no limitations on continuing operations.
UBS is expecting EML shares to rise and that it looks good value. The broker thinks that the EML share price is valued at 29x FY23’s estimated earnings.
EML said that that CBI will permit the Irish business in question (PCSIL) to sign new customers and launch new programs whilst staying within the material growth restrictions. Broad based reductions in limit controls on programs will not be imposed.
The ASX share noted that CBI intends that a material growth limitation over PCSIL’s total payment volumes will be imposed for 12 months or rescinded earlier after third party verification to confirm PCSIL’s remediation plan has been effectively implemented. PSCIL has been invited to provide submissions in relation to growth limits.
In the first quarter of FY22, EML’s revenue increased 29% to $52.4 million and underlying net profit (NPATA) jumped 41% to $4.6 million.
Audinate Group Ltd (ASX: AD8)
Audinate is a tech business that provides customers with the Dante system, which is an audio over IP networking solution. It is used in the professional live sound, commercial installation, broadcast, public address and recording industries.
The appeal of Dante is that it can replace traditional analogue audio cables by transmitting synchronised audio signals across large distances, to multiple locations at once, using an ethernet cable.
The ASX share is currently rated as a buy by at least three brokers. One of those brokers is Credit Suisse which has a price target of $11 on the business.
The broker noted supply chain issues for the company and its delayed sales, but this could mean longer-term demand for the business. But, the broker now isn’t expecting as much revenue growth in FY22 overall.
Audinate said the first quarter of FY22 was a record, with revenue of US$7.6 million, which was growth of 46.1% year on year. At the end of the quarter it had a backlog of orders for chips, cards and modules amounting to US$14.8 million – up from US$2.5 million in pre-COVID times. Customers are placing orders further into the future reflecting “strong underlying growth”.
Component shortages are expected to impact the business in the second half and for the foreseeable future. In response to this, Audinate is accelerating plans to release the next generation Brooklyn product by the fourth quarter of FY22, bringing forward engineering work already planned for the next 12 months – the ASX share will use a next generation chip that is not dependent on a capacity-constrained chip foundry.