ASX small caps come with heightened risk, but increased upside compared to blue-chip shares.
However, some investors may choose to allocate some portion of their portfolio to these kinds of equities.
If you are looking to monitor small caps, these two recently received updated guidance from brokers.
Here's what the experts are predicting.
Image source: Getty Images
Aroa Biosurgery Ltd (ASX: ARX)
Aroa Biosurgery is a New Zealand-based biomedical company specialising in soft tissue regeneration. It develops, manufactures, and distributes medical and surgical products to improve the healing of complex wounds and soft tissue reconstruction.
The team at Morgans has provided updated guidance on the company following its FY26 preliminary results.
The broker highlighted that the company upgraded FY26 revenue and EBITDA guidance.
We have revised our forecasts in line with guidance and increased our risk free rate (house view) which results in a small downgrade to our DCF valuation to A$0.77 (was $0.79). ARX will release its FY26 results on 26 May which will include FY27 guidance. The market will focus on revenue growth (MorgansF sit at 15%) and commentary around the continuing momentum with Myriad and SymphonyTM. We maintain our BUY recommendation with investor sentiment towards the name improving.
This price target from Morgans indicates an upside potential of 20%.
Titomic Ltd (ASX: TTT)
Another ASX small cap drawing positive outlooks is Titomic.
It's TKF technology provides the capabilities to produce commercially viable additively manufactured metal products that compete directly with traditional manufacturing methods. The company serves the aerospace, defence, sporting goods, medical, automotive, industrial equipment, construction, and marine sectors.
It recently received a reiterated buy recommendation from Bell Potter following its quarterly activities report.
The broker was impressed that during the March 2026 quarter, the company progressed on a number of process qualifications, commercial, and leadership fronts.
Looking ahead, TTT is engaged with several tier one aerospace and defence prime contractors for qualification ahead of the potential for initial production agreements. Applications include engine components, pressure vessel, heat-shielding for hypersonics and maintenance work.
Bell Potter is optimistic on this ASX small cap thanks to its competitive advantage.
TTT's TKFtechnology has several advantages over traditional casting and forging manufacturing process including shorter lead-times and production cycles and improved material properties.
The broker currently has a 50-cent price target on this ASX small cap, indicating an upside potential of more than 80% from the current share price, which is hovering around 27 cents per share.
