Investors on the hunt for outsized returns might want to check out the ASX shares in this article.
That's because the team at Morgans believes they could rise by 48% to 90% over the next 12 months.
Here's what the broker is recommending:
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Aroa Biosurgery Ltd (ASX: ARX)
Morgans is feeling even more positive about this ASX share following the release of interim results for the MASTRR Registry.
In response, the broker has retained its buy rating on the medical device company's shares with a 79 cents price target. This implies potential upside of approximately 48% for investors over the next 12 months. It commented:
ARX has reported positive interim results from the MASTRR Registry showing low infection rates which we expect will support greater surgeon adoption. We sit towards the upper end of the FY27 guidance which has revenue forecast to grow at 18% (mid-point). We have made no changes to forecasts or target price. The share price continues to languish despite operational and clinical progress; with 45% upside to our target price, we think ARX is undervalued. Buy.
EchoIQ Ltd (ASX: EIQ)
This medical device company's shares have crashed deep into the red this week following a disappointing US FDA update.
While many investors have decided to hit the sell button, Morgans thinks they should be sticking with the company.
As a result, it has retained its buy rating with a reduced price target of $1.10. This implies potential upside of approximately 95% for investors. It said:
EIQ has received a Not Substantially Equivalent (NSE) determination on its initial EchoSolv HF 510(k), despite an extensively validated dataset generated in line with FDA guidance. The device cannot be marketed under this application as submitted, pushing back the biggest near-term catalyst and revenue driver. Decision is a setback, but the timing points to a fixable problem. The determination landed day 264 of the FDA's 270-day clock, leaving the agency no scope to seek further information and forcing a decision on what it had. Management confirms a single outstanding statistical point, not a safety or clinical issue, and says the letter invites resubmission.
We read this as a file closed on expiry rather than a technology rejected, and the 510(k) route stays open. In any case, the regulatory and timing risks have increased, reflected in a valuation cut to A$1.10. Warrants the negative market reaction but ultimately view the validity of the tool as intact, this reads as a setback in how the data was presented and assessed, not a failure of the underlying technology itself.
