The tech sector has been having a tough week. While this is disappointing, it could have created an attractive buying opportunity for investors that are looking to make long term investments.
For example, two ASX 200 tech stocks that analysts are bullish on are listed below. Here's what they are saying about them:
TechnologyOne Ltd (ASX: TNE)
Analysts at Morgans are feeling very positive about the growth outlook of enterprise software provider TechnologyOne and see it as an ASX 200 tech stock to buy right now.
There are a number of reasons that Morgans is bullish. This includes its large cash balance and impressive track record of earnings growth.
In addition, the broker believes that TechnologyOne's strong growth in recent years is far from over. In fact, the broker suspects that its growth could be about to accelerate. In light of this, it believes that TechnologyOne's shares are likely to re-rate to higher multiples to reflect this stronger earnings growth. Its analysts commented:
TNE is an Enterprise Resource Planning (aka Accounting) company. It's one of the highest quality companies on the ASX with an impressive ROE, nearly $200m of net cash and a 30-year history of growing its earnings by ~15% and its dividend ~10% per annum. As a result of its impeccable track record TNE trades on high PE. With earnings growth looking likely to accelerate towards 20% pa, we think TNE's trading multiple is likely to expand from here.
Morgans currently has an add rating and $20.50 price target on its shares.
Xero Ltd (ASX: XRO)
Another ASX 200 tech stock that could be in the buy zone according to analysts is fast-growing cloud accounting platform provider, Xero.
Goldman Sachs is very positive on the company. This due largely to Xero's long growth runway thanks to its enormous global total addressable market (TAM). The broker explains:
Xero is a Global Cloud Accounting SaaS player, with existing focuses in ANZ, UK, North American and SE Asian markets. We see Xero as 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. Given the company's pivot to profitable growth and corresponding faster earnings ramp, we see an attractive entry point into a global growth story with Xero our preferred large-cap technology name in ANZ – the stock is Buy rated.
Goldman Sachs currently has a conviction buy rating and $180.00 price target on Xero's shares.
