Why Bell Potter is bullish on this ASX cybersecurity stock with 44% upside

The cybersecurity industry is being tipped by analysts to grow very strongly over the next decade as cyber threats increase and more infrastructure shifts to the cloud.

One way that investors could gain exposure to this trend is with the ASX cybersecurity stock in this article.

That’s the view of analysts at Bell Potter, who have just named it as a buy.

Which ASX cybersecurity stock?

The stock that Bell Potter is recommending to clients is Infotrust Ltd (ASX: ITS).

Infotrust, which was previously named Spirit Technology Solutions, is a leading provider of cyber security solutions and secure managed technology services to both small and medium businesses and enterprise customers in Australia.

Bell Potter highlights that the ASX cybersecurity stock provides its products and services across a wide range of sectors, including healthcare, utilities, education and government, and has over 1,000 customers nationally.

New acquisition

The broker appears pleased with news that Infotrust is acquiring Catalyst Cyber for $5 million. It notes that it is consistent with management’s target of being Australia’s leading cyber first technology services provider. It said:

Infotrust announced the acquisition of Catalyst Cyber for initial consideration of c.$5.0m, comprising approximately $3.5m in cash and $1.5m in Infotrust shares. The consideration equates to around 5x EBIT. The acquisition is expected to contribute approximately $1.3m revenue and $0.3m underlying EBITDA in 2HFY26. (For reference, Infotrust recently provided guidance for underlying EBITDA of >$3m in 2HFY26 so this is around a 10% uplift in H2.)

Catalyst Cyber is a Canberra-based cyber security consultancy focused on Federal Government customers and has deep capability across security advisory, security engineering, incident response and assurance services. The acquisition is consistent with Infotrust’s strategic vision to be Australia’s leading cyber first technology services provider.

In response to the news, Bell Potter has boosted its earnings estimates. It now expects underlying EBITDA of $3.8 million in FY 2026, $6.9 million in FY 2027, and then $8 million in FY 2028.

Major upside

According to the note, the broker has retained its buy rating with an improved price target of 62 cents (from 60 cents).

Based on its current share price of 43 cents, this implies potential upside of 44% for investors over the next 12 months.

Commenting on its recommendation, Bell Potter concludes:

We have reduced the multiple we apply in our EV/EBITDA valuation from 15x to 12.5x and increased the WACC we apply in the DCF from 9.4% to 9.7% given the continued sell-off in technology stocks since we last updated our target price. The net result is still a modest 3% increase in our TP to $0.62 which has all been driven by an increase in the DCF. This TP is >15% premium to the share price so we maintain our BUY recommendation.

Note we expect Infotrust to make further acquisitions in the cyber security sector given the much strengthened Balance Sheet following the sale of the Cloud & Communications business and these are likely in the near term. Like this acquisition, we expect future acquisitions to be earnings accretive and so provide an uplift to our forecasts as well as strengthen the company’s position as a sovereign cyber security provider.

The post Why Bell Potter is bullish on this ASX cybersecurity stock with 44% upside appeared first on The Motley Fool Australia.

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