Goldman Sachs names 2 ASX tech shares to buy with massive upside

Happy man and woman looking at the share price on a tablet.

Happy man and woman looking at the share price on a tablet.

Are you wanting to gain some exposure to the tech sector? If you are, then you might want to consider the two tech shares named below that Goldman Sachs is recommending as buys.

Especially with the broker tipping major upside potential ahead for their shares. Here’s what it is saying:

Life360 Inc (ASX: 360)

This location technology company is highly rated by analysts at Goldman Sachs. The broker has a buy rating and $7.85 price target on the ASX tech share.

Based on the current Life360 share price of $5.52, this implies potential upside of 42% for investors over the next 12 months.

Goldman highlights that its shares have undeservedly underperformed peers this year, which it feels has created a buying opportunity. Particularly given its high growth outlook and latent operating leverage. It explains:

Life360 has underperformed domestic and offshore peers YTD and continues to trade at a material valuation discount when adjusting for its robust growth outlook. The company is trading at ~2.7x FY24 EV/GP (vs ~6x key peers) and we believe reaching break-even and demonstrating resumption in paying circle growth can serve as catalysts to refocus investor attention on Life360’s strong balance sheet, high growth outlook and latent operating leverage. Our estimates and A$7.85/CDI TP are unchanged, and we reiterate Buy.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX tech share that Goldman Sachs is bullish on is Temple & Webster.

It currently has a conviction buy rating and $6.10 price target on the online furniture retailer’s shares. This suggests that its shares could rise approximately 60% from current levels.

Goldman believes that the company’s position as the largest pure-play online home retailer leaves it perfectly placed for the future thanks to structural growth drivers. It said:

We see a long term structural growth opportunity driven by increasing online penetration and consolidation of online market share. We think TPW is best placed to be a winner in a category that favours scale players, requires a specialist approach to e-commerce and logistics, has higher barriers to entry vs. other categories. The category remains under-penetrated relative to other markets (16% vs. the UK/US at 25-30%) even after a large pull forward in online; we expect online penetration to reach similar levels over time and expect TPW to be a beneficiary of this shift. We are Buy rated (on CL) on the stock.

The post Goldman Sachs names 2 ASX tech shares to buy with massive upside appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360 and Temple & Webster Group. The Motley Fool Australia has recommended Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

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