One area of the tech sector that has been growing rapidly is cyber security.
Unfortunately, there aren't many options for Aussie investors, so most end up using the Betashares Global Cybersecurity ETF (ASX: HACK) to access this thematic.
However, Bell Potter believes there is at least one ASX cyber security stock worth buying right now.
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Which ASX cyber security stock?
The stock that the broker is recommending to clients is Infotrust Ltd (ASX: ITS).
It is a provider of cyber security solutions and secure managed technology services to both small and medium businesses and enterprise customers in Australia.
Bell Potter highlights that the company provides its products and services across a wide range of sectors. This includes healthcare, utilities, education and government. At the last count, it had over 1,000 customers nationally.
The broker notes that the ASX cyber security stock has announced the appointment of a new CEO and provided an update on its performance. It said:
Infotrust provided an update to the market and the key points were: 1. Paul Timmins is joining as the new CEO and Julian Challingsworth will "transition out following a significant turnaround"; 2. Updated guidance for 2HFY26 is underlying EBITDA of c.$2.3m (vs >$3m previously); and 3. Focus is on growth and cash profitability in FY27.
The change in CEO is a surprise to us but, as highlighted in the release, the company has undergone a significant turnaround and is now entering a new stage as a cyber first technology business. The updated guidance for H2 is a downgrade of >20% and it is unclear what exactly has driven this but it is still a significant improvement on 1HFY26 underlying EBITDA of $0.4m. The focus on profitability in FY27 is probably no different and the earning improvement from 1HFY26 to 2HFY26 still suggests a much better result in FY27 relative to FY26.
Should you invest?
According to the note, Bell Potter has retained its buy rating on the ASX cyber security stock with a trimmed price target of 58 cents (from 62 cents).
Based on its current share price of 43.5 cents, this implies potential upside of 33% for investors over the next 12 months.
Speaking about its buy recommendation, the broker said:
[W]e believe the outlook remains positive and we also support the cyber first strategy. The earnings downgrades have, however, driven a 6% decrease in our TP to $0.58 which has mostly been driven by a reduction in the EV/EBITDA valuation with only a modest decline in the DCF. This TP is >15% premium to the share price so we maintain our BUY recommendation.
We note the company is in a strong cash position post the sale of its Cloud & Communications business so we also see potential earnings upside from more acquisitions in the cyber security space.
