Investors that have a high tolerance for risk might want to consider the small cap ASX shares in this article.
That's because they have just been named as buys with major upside potential. Here's what analysts are saying about them:
Ai-Media Technologies Ltd (ASX: AIM)
The first small cap ASX share that is being tipped as a buy is Ai-Media Technologies. It is a technology company that allows many of the world's leading brands to caption their TV broadcasts, live streams, events, virtual meetings and more.
It notes that its technology delivers over 7 million minutes of captioning, transcription, and translation for live and recorded media content, online events, and web streams every month.
Morgans rates the company as a buy. Last week, its analysts said:
Technology led captioning is the bulk of AIM's gross profit today and should exceed 90% within the next 12 months. Management has highlighted it will now aggressively pursue growth, targeting $60m of EBITDA by FY29, with the requirement of upfront investment in sales and product development.
We see substantial share price upside if management achieve its target. We estimate that $60m of EBITDA in FY29 is worth $2.91 in FY29 or $1.44 today. This equates to a ~40% IRR, leaving substantial margin for error. The reward is, in our view, well worth the risk.
Morgans has an add rating and $1.00 price target on its shares. This suggests that its shares could rise 27% from current levels.
Paradigm Biopharmaceuticals Ltd (ASX: PAR)
Another small cap ASX share that is highly rated is Paradigm Biopharmaceuticals.
It is a biotechnology company focused on repurposing Pentosan Polysulfate Sodium (PPS) for the treatment of Osteoarthritis (OA) in the knee. If approved the drug will have the brand name Zilosul.
Bell Potter notes that the "global market for a safe, effective treatment that provides superior patient outcomes compared to the standard of care is a multiple blockbuster." It adds:
In the US along the incidence of moderate to severe osteoarthritis is estimated at 30m persons. The pricing of the drug will ultimately be determined by the economic benefit associated with its use as well as the cost of other therapies. The conservative estimate is US$2,500 per year which places the addressable market in the tens of billions of US$.
In light of this, the broker is highly encouraged by recent trial data and the prospect of phase 3 studies starting next year.
As a result, Bell Potter put a speculative buy rating and 80 cents price target on its shares last week. This implies potential upside of 38% for investors over the next 12 months.
