The party is back on for two battered ASX tech shares.
WiseTech Global Ltd (ASX: WTC) and Catapult Sports Ltd (ASX: CAT) were among the biggest winners on Tuesday, jumping 6% and 8% respectively as investors returned to beaten-down technology names.
Could this be the start of a much bigger recovery, or just a short-term bounce after a brutal sell-off?
Both companies have plenty to prove, but analysts still see significant upside if they can rebuild investor confidence.
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WiseTech: Can the rally really begin after chair steps down?
WiseTech shares received a boost on Tuesday after the company announced that co-founder Richard White would step down from the chair role, with Raeline Murphy taking over.
White said recent personal media attention had become an unnecessary distraction from the strength of the underlying business.
The leadership change appears to have helped ease some investor concerns, but the recent recovery remains tiny compared with the damage already done.
The ASX tech share is up around 11% over the past five trading days, yet it remains down roughly 67% over the past year, making it one of the worst performers on the S&P/ASX 200 Index (ASX: XJO).
Despite the collapse, analysts remain surprisingly positive. According to TradingView data, 12 of the 15 analysts covering WiseTech rate the stock as either a buy or strong buy. The remaining three have a hold rating.
The average 12-month price target sits at $66.69, suggesting potential upside of around 78%. The most bullish analyst sees the shares reaching $120.60, which would represent upside of more than 220%.
Bell Potter remains optimistic as well. While the broker recently cut its price target from $78.75 to $71.75, it maintained its buy rating. The revised target still implies potential upside of more than 90%.
Catapult: Expanding while maintaining competitive edge
Catapult shares also enjoyed a strong session on Tuesday, although there was no specific price-sensitive announcement behind the move.
Instead, investors appear to be continuing the rebound from the stock's late-June lows.
The recovery has already pushed Catapult shares more than 20% higher from those levels, although the bigger picture remains challenging. The stock is still down around 44% over the past 12 months.
Catapult's biggest strength is the stickiness of its technology. Professional sporting teams build years of performance data into its platforms, creating switching costs that make it difficult for competitors to win customers.
The company provides athlete performance and analytics technology used by some of the world's biggest sporting organisations, including teams across the AFL, NRL, Premier League, NFL, NBA, MLB and international rugby competitions.
The challenge is growth. Like many smaller technology companies, Catapult needs to keep expanding its customer base while proving that it can maintain its competitive edge.
Analysts believe the market may be underestimating its potential. All brokers that cover the ASX tech share rate it a buy. The most bullish forecast is $8.25, a potential gain of 146% for the next 12 months.
Morgans currently rates Catapult as a buy with a $5.40 price target, which is in line with the average price target. Based on recent trading levels around $3.35, that implies upside of approximately 60%.
