2 exciting small cap ASX shares that analysts rate as buys

These small cap shares have been given buy ratings…

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Looking for some small cap shares to add to your portfolio? Then have a look at the two listed below.

Here's why analysts think they could be in the buy zone:

Readytech Holdings Ltd (ASX: RDY)

The first highly rated small cap ASX share to look at is ReadyTech. It is an enterprise software company serving market verticals including higher education and local government.

ReadyTech has been growing at a strong rate for several years and continued this trend in FY 2022. Earlier this week, the company reported a 56.5% in revenue to $78.3 million and 45.5% jump in underlying EBITDA to $28.6 million.

Another positive was that the company's recurring revenue increased to 76% of total revenue from 65% a year earlier. This bodes well for the future and helped underpin an increase in the company's FY 2026 organic revenue target to over $160 million. This is more than double its current revenue.

In response to the update, the team at Goldman Sachs reiterated its buy rating with a $4.30 price target. Goldman believes that ReadyTech "remains materially undervalued relative to profitable SaaS peers."

Serko Ltd (ASX: SKO)

Another small cap ASX share to consider is Serko. It is the online travel booking and expense management provider behind Zeno Travel and Zeno Expense platforms.

The company's Zeno Travel platform provides artificial intelligence-powered end-to-end travel itineraries, cost control, and travel policy compliance to corporate customers. Whereas the Zeno Expense platform allows businesses to automate and streamline their expense administration function, identify out-of-policy expense claims, and prevent fraud.

It also has a game-changing deal with travel booking giant Booking.com which is beginning to take shape now COVID headwinds are easing. It is partly for this reason that Citi is very positive on Serko.

So much so, it currently has a high risk buy rating and $5.10 price target on its shares.

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 positions in and has recommended Readytech Holdings Ltd and Serko Ltd. The Motley Fool Australia has recommended Readytech Holdings Ltd and Serko Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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