The little-known ASX tech stock that could rise 25% in a year

A leading broker thinks this business has excellent growth potential.

| More on:
A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares

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

The ASX tech stock Siteminder Ltd (ASX: SDR) is a leading opportunity according to one of the top brokers in Australia.

The company aims to provide software that "unlocks the full revenue potential of hotels". It's responsible for more than 115 million reservations worth over $70 billion in revenue for its hotel customers annually. Its all-in-one hotel management software for small accommodation providers is called Little Hotelier.

There are a number of positives about the company, according to the broker UBS.

Bullish reasons UBS likes this ASX tech stock

The broker said there are multiple positives for the company's outlook following the FY24 third-quarter update.

First, UBS noted that Siteminder's underlying free cash flow of negative $0.2 million was close to breakeven. This was consistent with the management's target of generating positive free cash flow in the second half of FY24.

The second positive was developments with its new product – 'Channel Plus' signed an agreement with Trip.com Group. This means hoteliers can "effortlessly distribute their inventory to the rebounding Chinese outbound tourism market, while Trip.com will gain access to more hotels." UBS noted that 14 channels have been signed, compared to just six in the FY24 first half. There is "strong initial customer interest" in Siteminder's new releases, according to UBS.

The third positive about Siteminder is its product enhancements. The ASX tech share has introduced Siteminder Pay into "new markets". The company also noted the rollout of Siteminder Pay terminals is on track for the first half of FY25. Little Hotelier Autopay, which was released at the start of the FY24 third quarter, has seen "strong adoption and increased Siteminder's capture of gross booking value at participating properties."

The final positive UBS pointed to about the ASX tech stock was that hotel subscriber additions have continued the momentum from the first half of FY24, which is "skewed towards larger properties", with the highest room count per hotel added since the COVID-19 reopening. In the broker's view, this provides higher revenue per subscriber, a larger base for future transactions and higher new product uptake, combined with lower subscriber churn.

The ASX tech stock is still targeting medium-term revenue growth of 30%. UBS thinks the core offering looks "appealing" and sees potential upside to its estimates if traction for the new product launch is stronger than expected.

Siteminder share price target

UBS has a price target of $6.65 on Siteminder shares, which is currently around 25% higher than it is today. A price target is where the broker thinks the Siteminder share price will be in 12 months.

That positive outlook is despite the Siteminder share price rising around 70% over the past 12 months, as seen on the chart below.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended SiteMinder. The Motley Fool Australia has positions in and has recommended SiteMinder. 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

A group of businesspeople clapping.
Technology Shares

Why Xero could be one the best shares to buy in the Asia-Pacific

Goldman Sachs thinks very highly of this tech stock.

Read more »

a man wearing old fashioned aviator cap and goggles emerges from the top of a cannon pointed towards the sky. He is holding a phone and taking a selfie.
Technology Shares

Up 80% in a year, this ASX All Ords stock is a 'long way short' of its true value

This fund manager is bullish.

Read more »

A smiling woman with a handful of $100 notes, indicating strong dividend payments
Technology Shares

If I'd put $5,000 into DroneShield shares just 1 year ago, here's what I'd have now

How good an investment has this tech company been?

Read more »

Vanadium Resources share price person riding rocket indicating share price increase
Technology Shares

Guess which ASX tech stock could double in value

This highly speculative stock could offer big returns according to one broker.

Read more »

A silhouette shot of a man holding a control in his hands and watching as a drone hovers overhead with sunrays coming from the sky.
Technology Shares

Unstoppable: How much higher can the DroneShield share price fly?

Another day flying high for this counter-drone player.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Share Fallers

Why did this ASX AI stock just crash 21%?

Investors just sent this ASX AI stock tumbling by more than 21%. But why?

Read more »

Man with rocket wings which have flames coming out of them.
Technology Shares

Guess which undervalued ASX All Ords stock could rocket 65%

Bell Potter thinks the market is seriously undervaluing this stock.

Read more »

Investor looking at falling ASX share price on computer screen
Share Fallers

Can the Appen share price recover amid AI mania?

Once an ASX tech darling, Appen has fallen on hard times in recent years. Can it capitalise on the AI…

Read more »