If you are looking for some tech sector exposure after recent weakness, then it could be worth looking at the ASX stock in this article.
That's because if Bell Potter is on the money with its recommendation, it could deliver massive returns for investors over the next 12 months.
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Which ASX tech stock?
The stock that Bell Potter is tipping as a buy is Gentrack Group Ltd (ASX: GTK).
It is a specialist billing and CRM solutions and managed services provider to energy, water, and airport industries.
Bell Potter notes that the majority of its revenue is generated from energy retailers and leveraged to IT infrastructure transformation within utilities/retailers, as well as future-facing distributed energy resources and decentralised storage trends.
The broker points out that these are driving increasingly complex data sets to manage and general legacy platforms were not designed specifically for this.
What is the broker saying?
Bell Potter notes that macro tailwinds are strengthening for this ASX tech stock, which bodes well for its future growth. It said:
Solar-generated energy accounted for 83% of the increase in global electricity demand for the first half of CY25, according to energy think tank, Ember, which also saw it pass a milestone in generating more power than coal for the first time during the measured window. Utility-scale solar deployments and grid connections are underpinned by its position as the lowest cost for energy generation on a $/MWh basis, as well as the most cost-competitive form of new-build generation (unsubsidised basis) according to Lazard's annual Levelised Cost of Energy report.
Though, there is one area of concern for the broker. That is lost momentum with its next generation g2.0 platform. It adds:
Despite these positive macro tailwinds requiring updated/modern billing stacks, GTK seems to have lost g2.0 project momentum, which makes us cautious heading into the FY25 result.
Time to buy
Despite concerns over the g2.0 project, Bell Potter remains very positive and sees significant value in the ASX tech stock.
This morning, it has retained its buy rating on Gentrack's shares with a reduced price target of $9.80 (from $13.20). Based on its current share price of $6.34, this implies potential upside of 55% for investors between now and this time next year.
Commenting on its buy recommendation, the broker said:
Our A$ DCF valuation downwards due to the current ~decade-low in NZD against the AUD and introduced a 50:50 EV/EBITDA blend to our valuation methodology. We move to cautious on the growth outlook for GTK, which is predicated on winning transformation projects/front book revenues converting into recurring/back book revenue streams, amid a lack of positive utility project news in an increasingly competitive environment. We are positive on secular tailwinds in decentralised energy driving utility billing stack transformations broadly.
