ASX penny stocks can come with increased volatility compared to blue-chip holdings.
However in addition to a balanced portfolio of well-established companies, some investors may be looking for high upside.
Investing in small, fast-growing companies can capture substantial gains compared to later investors who wait until those companies have grown.
One that has attracted a price target well above its current share price is Trajan Group Holdings Ltd (ASX: TRJ).
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What is Trajan Group
Trajan Group Holdings is a developer and manufacturer of analytical and life sciences products and devices, seeking to enrich human well-being through scientific measurement.
Its current portfolio of products comprises products, devices, and solutions that are used in the analysis of biological, food, and environmental samples.
This ASX penny stock has fallen by more than 30% over the last year.
However, broker Bell Potter has a buy recommendation on Trajan Group shares.
The broker also released a report on August 28 following the company's FY25 financial results.
What did the company report?
In its FY25 release, the company reported:
- Group revenue of $166.5m (up 7.4% on pcp)
- Normalised group EBITDA was $15.5m (below the guidance range ($17.0M–$19.0M) but up 26.2%)
The company also provided FY26 guidance.
It said it enters FY26 with a strengthened balance sheet, robust demand indicators, and clear momentum across core and emerging markets.
Trajan's diverse global operating footprint and revenue base along with its broad customer and product mix positions it well to navigate the rising volatility in the macro-economic environment.
Despite this market landscape, management expects FY26 net revenue to be between $170m to $180m and EBITDA to be between $16m to $19m.
What did Bell Potter have to say?
Following the FY25 results, broker Bell Potter said the company had relatively healthy revenue growth.
It said key drivers of revenue growth included automated systems, food safety, and HDX software within the Capital Equipment business.
It's important to note Bell Potter identified risks to the company's outlook, including commercial and competitive pressures related to product development, customer acquisition, and rival firms with stronger market positions, as well as operational risks across global manufacturing sites.
As a result, the broker has kept its buy recommendation on this ASX penny stock, however it did reduce its target price (previously $1.45).
TRJ has provided guidance for revenue and nEBITDA, with revenue expected to land between $170m – $180m and nEBITDA at $16m – $19m.
Our revenue estimate is near the mid-point and so we have determined to maintain that estimate. However, we were at the top of the range for nEBITDA and given macro volatility and the measured approach to cost reduction, we have shifted our FY26e nEBITDA down to the low end of the range at c.$17m.
The revised price target of $1.25 indicates an upside of 56.25% from yesterday's closing price of $0.80.
