Here are 'blue-sky valuations' for these hot ASX 200 tech stocks

These ASX 200 tech stocks could have huge potential according to analysts.

| More on:
A corporate female wearing glasses looks intently at a virtual reality screen with shapes and lights representing Block shares going up today

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Two of the most popular ASX 200 tech stocks are Xero Ltd (ASX: XRO) and WiseTech Global Ltd (ASX: WTC).

And they are popular for good reason.

Not only do they have very strong business models and equally strong long-term growth outlook, they also consistently deliver the goods for investors.

For example, over the last 12 months, the Xero share price has risen 30%. Whereas for the WiseTech share price, it has climbed 32% over the same period.

This compares very favourably to the performance of the ASX 200 index, which is up almost 4% since this time last year.

Where next for these ASX 200 tech stocks?

Goldman Sachs has been running the rule over these ASX 200 tech stocks this week and has given its opinion on what the future could entail.

For now, though, the broker has a buy rating and $152.00 price target on Xero's shares and a neutral rating and $85.00 price target on WiseTech Global's shares.

But looking further ahead, the broker has provided investors with its blue-sky valuations for these ASX 200 tech stocks.

This is its "bull-case valuation analysis, to assess what current market pricing could potentially be factoring in across core and expansion TAMs."

For Xero, it sees scope for the company's shares to rise to $231.00. It explains:

Xero bull case of A$231 (+93% implied upside), ascribing A$118 to ANZ/UK, A$72 to the US and A$40 to its transaction businesses. Given historical challenges in the US, market pricing (A$120) could be implying a strong ANZ/UK performance, stable transaction revenues (i.e., 10.5% revenue), but potentially no value to the US, or improved transaction performance (i.e., greater pay attach). Given: (1) increased US focus within the 3×3; (2) improved product capability; (3) refreshed management team, we would view such pricing as overly cautious.

For WiseTech, it sees potential for this ASX 200 tech stock to climb to $126.00 if everything comes to plan. It adds:

WiseTech bull case of A$126 (+41% implied upside), ascribing A$59 to core, A$45 to Customs and A$22 to Landside/Warehousing. Given the strong early performance in Customs, (K&N and FedEx) but the weaker revenue outlook at Blume/Envase, market pricing (A$89) could be factoring in a high degree of success within the Core FF/Customs, but limited success in Landside.

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

Sports fans looking at smart phone representing surging pointsbet share price
Share Gainers

Guess which ASX All Ords share just rocketed 25% on an earnings upgrade

Investors are bidding up the ASX All Ords share following an improved FY 2024 earnings outlook.

Read more »

A man looking at his laptop and thinking.
Technology Shares

ASX 300 fallen star down 62% in a year hits new 52-week low: Time to buy?

Here's my take on Weebit Nano shares today.

Read more »

A man and woman watch their device screens, making investing decisions at home.
Technology Shares

Own Xero shares? Here's what to expect from next week's results

Strong earnings growth is expected from this market darling next week.

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Technology Shares

Brokers name 2 rapidly growing ASX 200 tech stocks to buy

These tech stocks could be quality options for growth investors. Let's see why.

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Technology Shares

What are 3 of the safest ASX 200 tech shares in Australia right now?

Here's how these tech companies stand out in a turbulent market.

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Technology Shares

Buy this ASX 200 tech stock now before it's too late: Goldman Sachs

The broker sees potential for some big returns from this tech leader.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Technology Shares

Why is the Life360 share price sinking 9% today?

This high-flying tech stock has handed in its report card. How did it do?

Read more »

Smiling man working on his laptop.
Technology Shares

ASX tech stock up 54% on positive trading update

Integrated Research had some impressive news for its shareholders today.

Read more »