The team at Goldman Sachs has just updated its highly coveted conviction list for the Asia-Pacific (APAC) region.
These are the companies that the broker is most bullish on and expects to outperform.
There have been four new additions to the APAC list this month, with two making exits.
While the majority of its conviction list picks come from elsewhere in the region, one of the new additions is an ASX 200 tech stock.
That tech stock is cloud accounting platform provider Xero Ltd (ASX: XRO).
What is the broker saying about this ASX 200 tech stock?
Goldman has added Xero to its conviction list with a buy rating and $152.00 price target. This implies approximately 12% upside for investors from current levels.
It explains its bullish view on Xero as follows:
Xero is a Global Cloud Accounting SaaS player, with a particular focus on its core 3X3 markets – accounting, payroll and payments in Australia, the US & UK. Kane believes Xero, with its refreshed management team, is very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM. Following the company's pivot to profitable growth and corresponding earnings ramp, he sees an attractive entry point into a global growth story, with Xero his preferred large-cap technology name in ANZ.
Other ASX 200 stocks that are on the APAC conviction list are rare earths producer Lynas Rare Earths Ltd (ASX: LYC) and supermarket giant Woolworths Group Ltd (ASX: WOW).
For Lynas, the broker has a buy rating and $7.40 price target, which offers potential upside of 19%.
As for Woolworths, it has a buy rating and $40.40 price target on its shares. This suggests potential upside of approximately 23% for investors.
