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.
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.
