As the market continues to advance in 2024, one ASX 200 tech stock is outshining and is up double-digits this year to date.
Shares of Technology One Ltd (ASX: TNE) are now up 23.5% since January and have outpaced the S&P/ASX 200 Index (ASX: XJO) by more than 12% in the past year.
It was priced at $18.98 per share just before the open on Tuesday. You can see its performance in the last 12 months in the chart below.
These recent developments have caught the attention of top analysts. Based on recent fundamentals, one firm thinks the ASX 200 tech stock can grow. Here's a closer look.
ASX 200 tech stock set for growth?
Bell Potter is one broker that rates the ASX 200 tech stock a buy. The firm has a price target of $20.25, indicating around 6.6% upside from the time of writing.
Analyst Christopher Watt said the company was "poised for significant growth", noting the company's consistent annual profit increases and a 20% rise in revenue for H1 FY24, according to The Bull.
Watt said:
This software-as-a-service provider is poised for significant growth given consistent annual profit before tax increases in the past few years, which are projected to continue. Revenue from ordinary activities was up 20 per cent for the half year ending March 31, 2024, when compared to the prior corresponding period. The stock's price-earnings ratio has been re-rated higher.
It's not just Bell Potter who likes the company. Goldman Sachs also reiterates its buy rating on Technology One shares. In a June note, the broker raised its price target on the ASX 200 stock to $19.70, citing its "greater confidence" in earnings growth.
The firm highlighted a long-term opportunity for Technology One in the UK market, estimating it to be three times larger than Australia's key sectors.
It says Technology One's share price has been driven "by its strong rate of compound earnings growth" and market position. It sees this trend continuing:
In our view, the company is well placed to meet its A$500mn FY26 ARR target through a combination of SaaS flip uplift, net expansion and new customer growth. We see margin expansion resuming from FY24E onwards, which in combination with robust revenue growth should drive a mid-high teens EPS CAGR to FY26E, providing strong earnings visibility.
Meanwhile, Morgans also rates the ASX 200 tech stock a buy. According to my colleague James, it praised Technology One for its impressive earnings growth history and financial health.
Morgans expects the company's earnings growth to shift even higher, potentially increasing valuation multiples. It values the company at $20.50 per share.
Foolish takeout
Technology One has consistently increased its annual profit over the past few years. For the half year ending March 31, 2024, revenue from ordinary activities was up 20% compared to the previous period.
Despite this track record, and growth prospects in the UK market, the consensus of analyst estimates rates Technology One a hold, according to CommSec.
Analysts from Goldman Sachs, Morgans, and Bell Potter make up 3 of the 7 rating the ASX 200 tech stock a buy, whereas three firms say it is a sell.
As always, remember to conduct your own due diligence.
