The tech sector has been sold off over the past 12 months, leaving many ASX tech stocks trading well below what analysts believe is fair value.
One of those is Gentrack Group Ltd (ASX: GTK).
Image source: Getty Images
What is Gentrack?
It is a provider of specialist billing and CRM solutions and managed services to the energy, water, and airport industries.
Gentrack recently announced that it was strengthening its airport offering with the acquisition of UAE-based Dubai Technology Partners (DTP).
Bell Potter thinks this is a good move by the ASX tech stock. It said:
DTP technology looks to be integrated in a centralised application layer level and an interoperability layer connecting airport-wide platforms. Additionally, DTP brings across a headcount of 60 deep domain and regional experts which GTK views as favourable for its ability to drive scale through Veovo. The timing of the acquisition comes during a phase of heightened geopolitical conflict in the region; prior the Middle East was expected to grow passenger traffic through the region by 10.2% in CY26, 9.5% in CY26 and 8.2% in CY27 (IATA), underpinning the region's position as the worlds quickest growing market.
There are currently 48 expansion projects in the region worth $182.6b to support forecast passenger growth. Our earnings changes account for FY26 revenue contribution incorporating a marginal EBITDA accretion offset by low integration costs. We have also reduced our FY26+ Utilities margins accounting for uncertainty for timing around pipeline execution and flow on impacts to high margin ARR in FY27+; net EPS changes are -9%/-8%/-14% for FY26e-FY28e.
Big potential returns
According to the note, the broker has retained its buy rating on the ASX tech stock with a reduced price target of $8.80 (from $11.00).
Based on its current share price of $4.78, this implies potential upside of 84% for investors over the next 12 months.
Bell Potter is positive on Gentrack due to its position in a market experiencing large secular tailwinds. Commenting on its buy recommendation, the broker said:
Incorporating the earnings changes, our Target Price reduces to A$8.80 following an increase in our WACC to 10.6% due to a lift in our risk-free rate to 4.5%. We remain broadly positive on GTK due to the large secular tailwinds in rapidly shifting energy production and consumption trends driving increased complexity within grids, billing platform requirements and broader digital transformations.
