If you are on the lookout for options at the small side of the market, then it could be worth considering the two small cap ASX shares named below.
That's because these small caps have been rated as buys with major upside potential by analysts at Bell Potter. Here's what you need to know about them:
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AVITA Medical Inc (ASX: AVH)
The first small cap ASX share that Bell Potter is tipping as a buy is Avita Medical.
Avita is the healthcare technology company behind the Recell product. It is a medical device used for the reconstruction of skin in patients with severe (2nd and 3rd degree) burns. Adjacent markets for the product include trauma wounds, vitiligo, and potentially aesthetic use.
Bell Potter was pleased with the company's recent quarterly update. In response, it retained its speculative buy rating with an improved price target of $6.20. This implies potential upside of 83% from current levels.
Commenting on Recell product, the broker said:
Recell is arguably the most important innovation in the treatment of severe burns in several decades. The process uses a small autologous sample of unaffected skin. The proprietary enzyme formulation within the Recell device disaggregates the sample, allowing for the isolation of key cell types responsible for the regrowth of the dermis and epidermis. Once harvested the cells are sprayed onto the wound in a solution.
In respect to potential catalysts, the broker highlights that the "announcement of the label expansion to include soft tissue injury and vitiligo is expected in June with the launch in soft tissue wounds from 1 July." So, stay tuned for that!
Catapult Group International Ltd (ASX: CAT)
Another small cap ASX share to look at is Catapult. It is a global sports technology company that provides elite sporting organisations with real time data and analytics to monitor and measure athletes.
Bell Potter was pleased with Catapult's full-year results release this week. In response, its analysts have put a buy rating on its shares with an improved price target of $1.00. This suggests potential upside of 25% from where they currently trade.
In respect to the result, its analysts commented:
Catapult reported a much better than expected FY23 result with an underlying EBITDA loss of only US$(3.2)m versus our forecast loss of US$(13.1)m. The beat was driven by a better than expected gross margin (75.7% vs BPe 71.5%) and both lower than expected variable (US$26.2m vs BPe US$29.4m) and fixed costs (US$49.8m vs BPe US$54.0m).
The good news is that the broker highlights that the company still has a huge market opportunity to grow into in the future. It said:
Catapult is the clear global leader in wearable athlete tracking solutions and at the end of FY23 had >3,800 elite and professional teams as customers. Despite this leading position, however, only a small fraction of all elite and professional athletes currently have any wearable solution in place so the market is very underpenetrated and there is significant opportunity for growth.
