Now could be the time to pounce on APM Human Services International Ltd (ASX: APM) shares according to analysts at Goldman Sachs.
This morning, the broker has reiterated its buy rating on the ASX 300 share and is predicting huge returns for investors.
Why is this ASX 300 share a buy?
Goldman Sachs was very pleased to see the human services provider announce a major contract win in the UK last week. It commented:
We believe this contract win, and others recently announced, demonstrates APM's strong competitive position as a high quality provider of government services; we expect further contract wins to be a key catalyst moving forward.
In light of this, the broker has reiterated its buy rating with a $3.75 price target. Which, based on the current APM share price of $2.07, implies potential upside of over 80% for investors between now and this time next year.
In addition, the broker is expecting a 5% dividend yield in FY 2023 and a 5.6% yield in FY 2024, boosting the total potential return further.
Bargain buy
Goldman appears to believe the ASX 300 share could be a bit of a bargain. It highlights that APM's shares trade at a sharp discount to a rival in the United States. It said:
The current share price presents a compelling opportunity, and we reiterate our Buy rating with our 12m TP of A$3.75 offering 84% upside.
At 10.6x FY23E P/E, APM is now trading at deep discount to global peer Maximus (MMS.US (Not Covered), 20x PE FY23 Bloomberg Consensus EPS). Whilst there are some challenges with labour shortages and lower-than-expected employment services client inflows, recent increases in unemployment suggest this may be temporary. Simultaneously, APM continues to demonstrate its ability to win new contracts organically, and gain share in existing programs.
