The ASX growth share segment of the market has been hit in the last few weeks amid tariff volatility. At these lower prices, brokers believe some stocks could be undervalued.
UBS has buy ratings on several businesses, and in this article, I'll examine two of them.
Businesses growing their earnings at a strong pace are attractive because the power of compounding can help increase their underlying value faster.
With that in mind, the below two businesses are generating impressive double-digit profit growth.
REA Group Ltd (ASX: REA)
The REA Group share price has fallen more than 10% since 20 February 2025, as the chart below shows. UBS rates this ASX growth share as a buy with a price target of $294.
This business owns the leading property portal business in Australia, realestate.com.au. It also owns a number of other businesses, including REA India, realcommercial.com.au, flatmates.com.au, Mortgage Choice, PropTrack, Campaign Agent, and more.
UBS said the recent FY25 half-year result once again highlighted the strength of the business, together with a healthy (property) market, leading to 20% revenue growth and 22% growth of operating profit (EBITDA).
The broker believes there are tailwinds coming in FY26 and FY27 from "creating a more immersive platform and increased penetration of the luxe depth product".
UBS calls the company a buy because of its business quality, medium-term and long-term growth opportunity, and strong track record.
Based on UBS' estimates, the REA Group share price is trading at 55x FY25's estimated earnings.
Aussie Broadband Ltd (ASX: ABB)
Aussie Broadband is an Australian telecommunications business, selling NBN connections across residential, enterprise, government, and wholesale.
Since 3 March 2025, the Aussie Broadband share price has fallen more than 7%, as the chart below shows.
UBS recently upgraded its rating on this ASX growth share to a buy of $4.80 after seeing the FY25 half-year result.
The broker thinks the business is attractively valued because UBS forecasts that earnings per share (EPS) could grow at a compound annual growth rate (CAGR) of 26% over the next three years, including capital expenditure.
UBS believes Aussie Broadband can grow its market share in the residential space in the coming years, which will unlock revenue growth. In addition to that, the company is demonstrating "solid [market] share gain in other areas including business, enterprise and government, and turnaround/growth in Symbio".
The broker thinks the ASX growth share has a strong balance sheet, which supports additional shareholder return potential, such as special dividends and share buybacks.
Discussing its view on whether Aussie Broadband can grow its share of the NBN market, UBS said:
Yes. We estimate ABB's share of the NBN market grows from 9.7% in FY24 (ex-Origin) to 11.4% by FY28e, with total Resi broadband connections growing at a 12% CAGR from 589k in FY24 to 786k by FY28e. We see ABB continuing to differentiate itself through better customer service and on pricing relative to TLS (although more expensive vs other peers). Further, we see incremental contribution of 60k subs from newly launched challenger brand, Buddy Telco by FY28e.
According to UBS forecasts, the Aussie Broadband share price is trading at 23x FY25's estimated earnings.
