The TechnologyOne Ltd (ASX: TNE) share price is pushing higher on Thursday.
In afternoon trade, the ASX 200 tech stock is up 2% to $15.99.
This means that the enterprise software provider's shares are up 25% over the last 12 months.
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Can this ASX 200 tech stock keep rising?
The good news is that the team at Goldman Sachs believe that TechnologyOne's shares can keep rising from here.
According to a note, the broker has responded to its FY 2023 results by reiterating its buy rating with an $18.05 price target. This implies a potential upside of 13% for investors over the next 12 months.
In addition, the broker is forecasting a 1.4% yield, which brings the total return beyond 14%.
What did the broker say?
Goldman has been impressed with the company's transition to a cloud-based model. So much so, it believes that double-digit growth is possible in the coming years. It explains:
TNE has executed well on transitioning its customer base to the cloud and driving incremental cross-sell, in our view building the case for sustainable ~10-15% ARR growth with upside to TNE's 115% NRR target. The company is well funded with >A$220mn net cash, allowing for potential UK M&A to accelerate growth, and in our view can continue to compound earnings / cash flow at mid-to-high teens growth into the medium term.
In light of this, it believes the ASX 200 tech stock is undervalued at the current level. It adds:
In our view, TNE's current valuation does not account for its above-trend earnings growth outlook, nor the defensiveness of its earnings in a more challenging macro environment. With greater confidence in the medium term revenue/earnings outlook, we see TNE's growth-adjusted multiple discount vs peers as attractive and we believe the shares can outperform. Buy.
