It has been a tough time for TechnologyOne Ltd (ASX: TNE) shares.
Over the past 30 days, the ASX 200 stock has lost 21% of its value.
Why have its shares been sold off?
Investors have been selling the enterprise software company's shares this month following the release of its full year results.
Interestingly, TechnologyOne's shares tumbled despite it outperforming its guidance, announcing a special dividend, and reiterating its 2030 $1 billion+ annualised recurring revenue (ARR) target.
Not even bullish comments from its CEO, Ed Chung, could stop the selling. He said:
iPhones changed the market for mobile phones, Tesla changed the market for vehicles, UBER changed the market for how to catch a cab and now that we have Ai and SaaS+, TechnologyOne is changing the market for ERP and unlocking value for our customers.
Is this a buying opportunity?
This looks like one of the best buying opportunities for this ASX 200 stock in a long time. Especially given management's confidence that it can double in size every five years.
But I'm not alone in seeing this as an opportunity. A number of brokers have recently upgraded its shares in response to their sizeable decline.
For example, analysts at Morgan Stanley have upgraded its shares to an overweight rating with a $36.50 price target. This implies potential upside of 20% from current levels.
Elsewhere, UBS has put a buy rating and $38.70 price target on them, which suggests that upside of approximately 27% is possible between now and this time next year.
And over at Morgans, its analysts have upgraded its shares to an accumulate rating with a $34.50 price target. This is 13% above its current share price.
Commenting on its upgrade, the broker 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.
