Qoria Ltd (ASX: QOR) shares had a tough session on Tuesday.
The cyber safety products and services provider's shares crashed deep in the red following the release of its quarterly update.
Has this ASX stock's pullback created a buying opportunity for investors? Bell Potter thinks this is the case.
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What is the broker saying?
Bell Potter highlights that Qoria's quarterly update was a touch short of expectations, partly due to negative foreign exchange (FX) impacts on its annualised recurring revenue (ARR). It said:
Q2 exit ARR of $150m was 4% below our forecast of $156m but there was a negative FX impact of $5m which was more than we anticipated. Cash receipts of $32.8m in Q2 was also modestly below our forecast of $33.9m but the growth in H1 of 20% was consistent with the guidance. Net operating cash flow of $4m was $6m below our forecast of $10m and the miss was driven by the lower receipts than forecast as well as higher advertising and marketing.
The broker also points out that the ASX stock has reiterated its ARR, margin, and cash flow guidance for FY 2026. Though, it concedes that this is based on exchange rate assumptions that differ to spot rates. It adds:
Qoria reiterated its FY26 guidance of revenue >$145m, ARR growth >20%, adjusted EBITDA margin >30% and positive free cash flow for the full year. The revenue, ARR and EBITDA margin guidance, however, is all based on assumed FX rates of $0.64 for AUD/USD and $0.48 for AUD/GBP. Spot rates have been higher than these levels for most of FY26 – particularly the last couple of months – so there is likely to be a negative FX impact in FY26 – as there was in Q2 – unless the AUD weakens in H2.
In light of this, the broker believes the ASX stock will fall short of its ARR guidance and has downgraded its estimates. It said:
We have downgraded our FY26, FY27 and FY28 revenue forecasts by 4%, 5% and 6% which has largely been driven by higher AUD exchange rates relative to the USD and GBP. We now forecast FY26 revenue of $141m relative to the guidance of $145m+. The downgrades in revenue have led to downgrades in our adjusted EBITDA forecasts of 9% in each of FY26, FY27 and FY28. We now forecast an FY26 adjusted EBITDA margin of 20.1% compared to 21.3% previously.
Should you buy this ASX stock?
Despite the above, Bell Potter is urging investors to buy this ASX stock while it is down in the dumps.
According to the note, its analysts have retained their buy rating on Qoria's shares with a trimmed price target of 75 cents (from $1.00).
Based on its current share price of 41 cents, this implies potential upside of 83% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
We have rolled forward our EV/Revenue valuation a year and now apply a 6x multiple to forecast FY27 revenue. We have also increased the risk-free rate we apply in the DCF from 4.25% to 4.5% and this has increased the WACC we apply from 8.8% to 9.1%. The net result of these changes and the downgrades is a 25% decrease in our PT to $0.75 which is >15% premium to the share price so we maintain the BUY rec.
