Why analysts rate these ASX growth machines as buys

These growth shares have been tipped as buys…

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Are you wanting to add some new ASX shares to your portfolio this month? If you are, read on.

Two ASX growth shares that could be worth considering are listed below. Here's what you need to know about them:

Altium Limited (ASX: ALU)

The first ASX growth share to look at is electronic design software provider Altium.

Due to the leadership position it has carved out for itself in an enormous and growing market, Altium has been growing its earnings at a solid rate for many years.

This continued in FY 2022, with the company recently reporting a 23% increase in revenue to US$220.8 million and a 57% jump in net profit after tax to US$55.5 million

Analysts at Bell Potter were very impressed. They commented:

FY22 EBITDA grew 33% to US$79.8m which was 6% above our forecast of US$75.4m. The beat was driven by higher revenue than forecast (US$220.8m vs BPe US$218.5m and guidance towards top end of US$209-217m) and a better EBITDA margin than forecast (36.2% vs BPe 34.5% and guidance towards low end of 34-36%). Note there were no positive one-offs which drove the beat and the result was even negatively impacted by one-off costs of US$1.3m from relocating staff

Pleasingly, the future remains as bright as ever, with management continuing to target the more than double of its revenue to US$500 million by 2026.

Bell Potter currently has a buy rating and $37.50 price target on its shares.

Readytech Holdings Ltd (ASX: RDY)

Another ASX growth share that could be in the buy zone in September is enterprise software provider Readytech.

Like Altium, last month, Readytech released its full year results and impressed analysts. The company revealed a 16.8% year over year increase in revenue to $78.3 million and a 45.5% jump in underlying EBITDA to $27.5 million.

In response, the team at Goldman Sachs commented:

Strong organic growth execution builds confidence in medium-term earnings outlook. […] RDY remains materially undervalued relative to profitable SaaS peers (we estimate >50% discount on growth-adjusted FY24E EV/EBITDA) and is building an impressive track record of organic growth execution which in our view will drive a re-rating over time.

Also like Altium, management is confident in its outlook. It expects organic revenue growth in the mid-teens in FY 2023. This will be boosted by an additional $2 million of incremental revenue from FY 2022 acquisitions. But it won't stop there, the company has upgraded its FY 2026 revenue target from $140 million to $160 million. This will be double FY 2022's numbers.

Goldman Sachs has a buy rating and $4.30 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 Altium and Readytech Holdings Ltd. The Motley Fool Australia has recommended Readytech Holdings 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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