TechnologyOne Ltd (ASX: TNE) shares have been under significant pressure this week.
The enterprise software provider's shares sank 17% on Tuesday despite releasing a record result for FY 2025.
Has this created a buying opportunity? Let's see what analysts are saying about the tech stock.
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Should you buy TechnologyOne shares?
According to a note out of Bell Potter, its analysts have retained their hold rating on the company's shares with a reduced price target of $33.00.
Commenting on the result, the broker said:
FY25 PBT of $181.5m was close to in line with our forecast of $182.4m and VA consensus of $181.8m. The result was still ahead of guidance, however, which was PBT growth of 13-17% and the result was 19% growth.
Bell Potter advised that it has trimmed its valuation to reflect a re-rating in the tech sector this month. It adds:
We have reduced the multiples we apply in the PE ratio and EV/EBITDA valuations from 80x and 42.5x to 65x and 35x due to the recent de-rating in the tech sector and the multiples being applied. We have also increased the WACC we apply in the DCF from 7.9% to 8.1% for the same reason.
The net result is a 13% decrease in our PT to $33.50 which is <15% premium to the share price so we maintain our HOLD recommendation. We note the outlook is little changed and we still forecast strong double digit growth over the medium term but the current FY26 PE ratio of c.60x is still demanding in our view and equates to a PEG ratio of around 3x.
Over at Macquarie Group Ltd (ASX: MQG), its analysts are also sitting on the fence with TechnologyOne shares. This morning, they have retained their neutral rating with a $28.20 price target.
Macquarie is concerned that it may get worse before it gets better for the company. The broker commented:
Long-term story remains attractive, but it may get worse before it gets better. Valuation rebased post-result, but slowing growth, higher costs, and a lack of clear positive catalysts in the near-term while still trading at ~62x NTM PER suggests there may be further downside risk. Retain Neutral.
Broker upgrade
Finally, the team at Morgans doesn't agree. Its analysts have upgraded TechnologyOne's shares to an accumulate rating with a $34.50 price target. They said:
TNE's FY25 result was largely in line with our expectations with the group delivering, PBT growth of +19% to $181.5m ahead of its 13-17% guidance range, and in line with consensus. The negative share price reaction appears to have been driven by softer than expected ARR/NRR print, which saw a 2% miss to ARR growth expectations vs consensus, despite this, the group continues to deliver, with ARR of $554.6m (+18% YoY), which along with its NRR growth of 115% continues to see TNE Ontrack to achieve its long-term ARR growth aspirations. We modestly pare our EPS forecasts by 1-3% in FY26-28F. and move to an ACCUMULATE rating, with our target price $34.50 now reflecting a TSR of +19% following TNE's post result share price movement.
