Energy One Ltd (ASX: EOL) is a soaring ASX technology stock that is now drawing attention from broker Bell Potter.
The company is a global provider of software products, outsourced operations, and advisory services for wholesale energy, environmental, and carbon trading markets. Its solutions support energy participants across Europe, the UK, and the Asia-Pacific region.
In the last 12 months it has soared almost 180%.
The surge has been thanks to a strong financial performance. Revenue growth fuelled a surge in profitability, driven by the operating leverage of the software business.
In FY25, the company reported revenue growth of 17% to $61.4 million and annual recurring revenue (ARR) jumped 22% to $60.4 million.
EBITDA rose by 57% to $10.5 million, and net profit after tax (NPAT) increased by 74% to $5.9 million.
Bell Potter initiates coverage
The surging ASX technology stock has drawn the attention of Bell Potter.
The broker issued a new report on Thursday last week that included a buy recommendation and price target of $20.80.
Shares closed last week at $17.58, which means the broker sees an upside of approximately 18.31%.
The broker said the company now has more than 450 customer installations in 30+ countries with 12 different products available.
The company's value proposition is flexibility, speed of implementation and the removal of complexities. EOL's 'one-stopshop' approach is a key differentiator against more pure-play competitors.
The company delivers software and services which are crucial to the operations of its customers. Without it, customers are unable to perform day-to-day.
Bell Potter believes as a result, Energy One intimate client offering has high switching costs leading to a sticky customer base as evidenced by its historically low churn.
Emerging tailwinds
Bell Potter also has optimism around the leverage of this ASX technology stock to decarbonisation tailwinds.
EOL is well placed to benefit from the rising share of renewable energy in the global energy system. The variability and intermittency of renewables increase market complexity and volatility, driving demand for reliable software and operational support.
It said Europe's recent quadrupling of its electricity trading windows enhances this company's opportunity to sell, cross-sell and up-sell its product suite.
Bell Potter believes the 'mission-critical' nature of Energy One's offering provides a resiliency to its earnings and an ability to push through necessary price increases.
Potential catalysts for further upside include further M&A in Europe to hasten expansion and management commentary ensuring confidence in their ambitious cash EBITDA margin target.
