Goldman Sachs says these excellent ASX tech shares are buys

If you are looking to bolster your portfolio with some ASX tech shares before the sector rebounds fully, you may want to look at the two listed below that have been tipped as buys by Goldman Sachs.

Here’s what the broker is saying about these ASX tech shares:

Readytech Holdings Ltd (ASX: RDY)

The first ASX tech share that Goldman Sachs rates as a buy is Readytech.

It is a leading provider of mission-critical software-as-a-service (SaaS) solutions for the education, employment services, workforce management, government and justice sectors.

Goldman Sachs remains very positive on the company’s outlook due to its defensive earnings. It also sees plenty of value in its shares at the current level compared to peers. It explained:

RDY remains a tech value play within our coverage universe, trading at a >50% discount to peers when accounting for its robust growth outlook. Government software has been a pocket of strength and resilience within TMT (~3/4 of RDY’s earnings) and we are positive on RDY’s ability to deliver mid-teens organic growth at an expanding profit margin through the cycle.

Goldman has put a buy rating and $4.45 price target on its shares.

Xero Limited (ASX: XRO)

Another ASX tech share that Goldman Sachs rates highly is Xero.

It is a cloud-based accounting and business platform provider to small and medium sized businesses globally.

Goldman is positive on Xero due to its massive total addressable market (TAM) and favourable tailwinds that look set to support its growth in the coming years. The broker said:

We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$76bn TAM. Following the recent underperformance (absolute/relative), we see an attractive entry point into a compelling global growth story and our preferred large-cap technology name in ANZ, and are Buy rated (on CL).

Goldman Sachs currently has a buy rating and $109.00 price target on Xero’s shares.

The post Goldman Sachs says these excellent ASX tech shares are buys appeared first on The Motley Fool Australia.

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More reading

• The smartest ASX shares to buy with $20 right now
• Conviction list: Goldman Sachs tips big returns from these ASX 200 shares
• Sitting on cash? These 2 ASX shares are great buys today but won’t be forever
• Here are the top 10 ASX 200 shares today
• These could be the best ASX 200 growth shares to buy: analysts

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ReadyTech and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended ReadyTech. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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