Brokers have named a number of ASX shares as opportunities in June 2022. Businesses that are growing revenue at a relatively fast pace could turn into much bigger businesses over time.
These are businesses that are thought of as longer-term opportunities because of their current valuations and their prospects of growth.
Brokers try to calculate where a company's share price is going to be in 12 months after their analyses of the business. That's called a price target. Price targets aren't guarantees, but just a guess and acknowledgement of how much potential growth the broker sees for the business. The bigger the price target, the more possible gains the broker thinks there is.
Let's look at two of the ASX share opportunities.
Mach7 Technologies Ltd (ASX: M7T)
Mach7 is a business that provides medical imaging systems that develops "innovative image management and viewing solutions for healthcare organisations".
It has more than 150 customers across 15 countries including integrated delivery networks, national health systems, medical research facilities, large academic medical institutions, regional community hospitals, private radiology practices, and independent provider groups.
Morgans currently rates it as a buy with a price target of $1.55. That implies a potential rise of more than 150% over the next year.
The broker took into account the ASX share's recent FY22 third quarter.
In that update, the business said it achieved net positive operating cashflows for the quarter of $0.5 million. It also generated record financial year to date earnings before interest, tax, depreciation and amortisation (EBITDA) of $3.2 million, up $4.7 million or 306% on last year. Third-quarter sales orders rose $4.4 million to $26.5 million. It's also on track to deliver sales orders of $30 million for FY22.
The company also pointed to two new channel partnerships – AdvaHealth and Althea. On Althea, Mach7 said that it has a presence in 17 countries and will initially be working in Italy and the UK. There is also potential for further expansion in the EU.
BWX Limited (ASX: BWX)
BWX is a natural beauty business that has a number of brands including Sukin, Andalou Naturals, Mineral Fusion, and Go-To Skincare. The ASX share also sells products through the e-commerce sites Flora & Fauna and Nourished Life. It's looking to expand the brands to more countries.
The broker UBS currently rates BWX as a buy with a price target of $2.55. That implies a possible rise in the BWX share price of more than 80% over the next year.
BWX recently gave a market presentation that looked at various elements of the business.
The company has done a business-wide review of financial and operating performance, as well as ongoing initiatives to support a sustainable cost base. It has identified $5 million in extra costs it can cut to streamline its operating model. In particular, it's looking to improve its marketing return on investment (ROI) and achieve trade spend efficiency improvements.
As well, BWX is looking to grow its profit margins through various initiatives including price increases, increased manufacturing capacity, and improved operational efficiency.
The company is expecting to grow its revenue by between 20% to 25% in FY22 while the mid-point of the underlying EBITDA guidance could mean growth of around 3%.
Using UBS' estimates on the ASX share, the BWX share price is valued at 17 times FY22's estimated earnings and 11 times FY23's estimated earnings.
