Morgans has released a bunch of new research reports this week, and amongst them are a couple of small-cap stocks it thinks will perform exceptionally well over the next 12 months.
They are both technology stocks of a sort, albeit with very different businesses.
Let's have a look at what Morgans is saying.
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BETR Entertainment Ltd (ASX: BBT)
BETR has recently released a first-quarter trading update, which gave the broker the chance to run the ruler over the numbers and reassess the company's value.
BETR reported that first-quarter turnover was up 19.1% to $432.3 million, with its margin rebounding in October after the end of the quarter, which was affected by "customer friendly" results.
The betting company reaffirmed its FY27 guidance of EBITDA of $13 to $19 million and positive operating cash flow.
Chief Executive Officer Andrew Menz said:
We're very pleased with the growth we experienced in Q1 with our investment in product and brand converting to desirable customer activity heading into spring. Products like Wildcards are bringing in new, high-quality customers and winning a larger share of wallet in our most-important season. While Q1 had some customer-friendly results, margin has rebounded strongly in October. We are ready for the upcoming regulatory changes and reaffirm our FY27 guidance.
Morgans called it a "mixed" result, with solid turnover growth offset by the customer friendly outcomes.
The broker lowered its EBITDA forecast for the company from $15.4 million to $14 million, leading to a reduction in its share price target from 36 cents to 34 cents.
This compares with the current share price of 13.5 cents.
If the price target were achieved, it would represent a 151.8% return.
Morgans said their positive view was underpinned by their assessment that the company had a proven management team, scalable proprietary technology, and a solid track record of executing accretive M&A.
Airtasker Ltd (ASX: ART)
Airtasker also recently released a first-quarter trading update, which Morgans described as "solid".
The company said in its ASX release that Australian gross marketplace volume was up 20.9% on the previous corresponding period to $57.3 million, and its growth rate was three times that of the same period last year.
Revenue in the UK was up 39% while in the US it was 20.9% higher.
Paid subscriptions passed 25,000 at the end of September and were on track to hit the FY27 target of 50,000, the company said.
Morgans said the company's growth in Australia was a highlight in what was usually a seasonally softer period.
They noted that booked tasks were up about 8% and the average task price rose about 12%.
Morgans added that while the current volatile market conditions posed a risk, they were attracted to the strong growth opportunity ahead for the company.
It said there was a large total addressable market both domestically and offshore, which informed its solid share price target.
Morgans maintained its price target for Airtasker at 47 cents compared with the current price of 21 cents.
If achieved, this would represent a 123.8% return.
