If you're looking for some shares to buy post-earnings season, then you may want to check out the two listed below.
The team at Goldman Sachs believe these shares are buys after posting solid but under-appreciated results last month. Here's what the broker is saying:
REA Group Limited (ASX: REA)
Goldman feels that the market under-appreciated the strength of this property listings company's results last month and has reiterated its conviction buy rating with a $164.00 price target.
Based on the current REA share price, this implies potential upside of 32% for investors over the next 12 months. Goldman commented:
Shares are trading back in-line with pre-result levels, despite having a solid FY22 result with core Australia EBITDA +2% vs. GSe, and outlook commentary that was very positive, particularly around expectations for delivering sustained double digit yield growth through the cycle, including in FY23E.
We sit +2% vs. consensus NPAT in FY23, and believe the market is still being too conservative on the pricing power of REA, which we believe is well-placed to deliver on its targets of double digit yield growth. In FY23 this will be driven by 6% price rises and strong uptake of Premiere Plus and Premiere All late in the prior year, while these trends will continue into FY24, and will be supported by a more material price rise that could potentially exceed 10% itself.
Readytech Holdings Ltd (ASX: RDY)
Another ASX share that the broker believes the market is under-appreciating is enterprise technology company Readytech.
Goldman has a buy rating and $4.30 price target on its shares. Based on the current Readytech share price, this implies potential upside of 42% for investors. Its analysts commented:
RDY is building an impressive track record of organic growth, delivering +17% in FY22 and guiding to mid-teens again in FY23, helping to dispel market concerns regarding RDY's underlying growth.
While concerns around margins are valid with FY23 guidance implying EBITDA margins contract ~250-300bps, we think FY23 will be the trough as RDY exerts pricing power across the portfolio and cycles headwinds from tech labour inflation into FY24. The company has high gross margins (>90%), low churn (~3%) and high recurring revenue (84%) which lends itself to increasing profitability as it scales.
Strong line-of-sight to its FY26 targets, combined with EBITDA margins trending back towards high 30's should see RDY grow EPS at a >20% CAGR to FY26E.
