Bell Potter says this small-cap ASX share could rise 50%

There are plenty of options for investors at the small end of the Australian share market.

One small-cap ASX share that stands out right now according to analysts at Bell Potter is Alcidion Group Ltd (ASX: ALC).

What is the broker saying?

Bell Potter notes that the healthcare technology company has just announced the acquisition of the Kyra business from Telstra Group Ltd (ASX: TLS).

It was pleased with the deal and has described it as “attractive”. It said:

ALC have acquired a business unit within Telstra Health, referred to as Kyra flow, for $3.0m cash upfront plus an additional $1.0m earn-out dependent on recurring revenue thresholds within 12 months of deal completion. The accretive transaction will be funded relatively comfortably from ALC’s existing cash balance, which was $15.1m at 31-March and expected to increase to >$20m as at 30-June (excluding the acquisition payment). Key financial details of the acquired business are: (1) FY26e revenue of $3.7m, >90% is recurring revenue); (2) FY26e underlying EBITDA $1.1m; (3) Revenue and EBITDA “broadly consistent with FY25 financial performance” – i.e. modest growth, if any; (4) completion by end-June 2026; and (5) Kyra has 33 Australian customers across various hospital settings, 31 of which are not prior ALC customers.

The purchase price (including earn-out) is 1.1x revenue and 3.6x underlying EBITDA and is therefore immediately accretive to ALC’s current valuation of 2.4x EV/Rev and ~17x EV/EBITDA per our FY26e forecasts. We view this as an attractive and disciplined bolt-on acquisition where the most obvious synergy is the longer term up-selling potential of 31 new customers using Kyra’ older product to a superior (and more lucrative) cloud-based product from Alcidion (Miya Precision).

In light of this, the broker has boosted its revenue forecasts for FY 2027 and FY 2028 and is now forecasting annual recurring revenue (ARR) of $38 million in FY 2027.

Small-cap ASX share tipped to fly

According to the note, Bell Potter has reaffirmed its buy rating and 16 cents price target on the company’s shares.

Based on its current share price of 10.5 cents, this implies potential upside of 52% for investors over the next 12 months.

Speaking about its recommendation, Bell Potter concludes:

There is no change to our $0.16 PT or BUY recommendation following the acquisition. We continue to employ an EV/Revenue multiple (3.5x the avg of FY26/27 revenue) and DCF (10.0% WACC, 3.0% TGR) methodology to derive our PT, with key valuation assumptions unchanged. The most immediate catalyst for ALC is the imminent finalisation of the UHSussex contract, expected within May.

The post Bell Potter says this small-cap ASX share could rise 50% appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alcidion Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Alcidion Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.