Bell Potter is recommending this ASX tech stock as a buy

There are a decent number of options in the tech sector for investors to choose from.

But one ASX tech stock flying under the radar that could be worth getting acquainted with has been named in this article.

Let’s see why Bell Potter thinks it could be a buy this week.

Which ASX tech stock?

The tech stock that is being tipped as a buy is Cogstate Ltd (ASX: CGS).

It is a healthcare technology company focused on optimising brain health assessments, predominantly for clinical trials of novel medicines.

Bell Potter notes that the company mostly generates revenue from providing services to biopharma customers conducting clinical trials in central nervous system (CNS) indications. This includes Alzheimer’s disease.

It notes that the company held an investor webinar this week, which provided insights into the business and its Orexin opportunity. It said:

As expected, there was minimal new financial data, but rather the presentation focused on qualitative aspects regarding recent tailwinds from (1) channel partnerships with Medidata and others, (2) increased use of CGS’s central rating capabilities, and (3) newer indications such as narcolepsy and psychiatry where CGS has been winning more work recently. These three inter-related aspects have been driving contract sales growth and diversification over the last ~12 months (refer to our latest Q3 update for more detail).

Regarding point #3, we have reviewed the clinical-stage drug development landscape in narcolepsy and other orexin-related conditions. We conclude the orexin market reflects at least a ~US$30-40m contract opportunity for CGS over the coming ~3-4 years, for which CGS is very well placed to continue being a leading provider for endpoint management and trial monitoring solutions. Additionally, CGS continues to benefit from partners such as Medidata who are bringing in more contract opportunities, i.e. more ‘shots on goal’. These partners are clearly starting to convert into additional wins for CGS (e.g. 62% of sales contracts in 2Q FY26 were driven by these partners).

In light of this, the broker remains very positive on the ASX tech stock and is recommending it to clients.

How much upside does Bell Potter see?

According to the note, Bell Potter has retained its buy rating and $3.20 price target on Cogstate’s shares.

Based on its current share price of $2.75, this implies potential upside of 16% for investors over the next 12 months.

While its shares trade on multiples that are in line with peers, Bell Potter believes it has a stronger growth outlook. It commented:

BUY recommendation and $3.20 PT remains unchanged. CGS is trading on ~13.5x EV/EBITDA based on our FY27e, which is in line with the global CRO peer avg, however CGS has a far more attractive growth outlook than these peers.

The post Bell Potter is recommending this ASX tech stock as a buy 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 Cogstate. The Motley Fool Australia has positions in and has recommended Cogstate. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.