If you are on the hunt for the next shooting star in the small-cap tech sector, Citigroup may have just the trick for you.
Appetite for such stocks is strong after Brainchip Holdings Ltd (ASX: BRN) share price, Pointerra Ltd (ASX:3DP) share price and Tesserent Ltd (ASX: TNT) shot out the lights in 2020.
These stocks gained more than 700% over the past 12 months when the S&P/ASX 200 Index (Index:^AXJO) is standing at breakeven at best.
Big rewards and risks for this ASX small cap tech stock
If you want big rewards, you have to be prepared to stomach big risks. On that front, Citigroup reckons the Control Bionics Ltd (ASX: CBL) could be worth a punt.
The broker just initiated coverage on the CBL share price and slapped a “speculative buy” recommendation on it.
Control Bionics makes a wearable device that helps the disabled operate and communicate via a computer using only neural or visual signals.
Does CBL have a competitive advantage?
The company’s technology, called NeuroNode, has an edge over the competition. Traditional systems use the movement of an arm or finger to activate a keyboard. Other visual/neural devices are harder to use and isn’t as flexible.
“CBL has received regulatory clearance for the NeuroNode technology in key regions of US, Australia, Canada and Europe,” explained Citi.
“A key target market is Japan and steps are in progress to secure relevant approvals.”
Key revenue driver
Another noteworthy point is that Control Bionics is an approved provider under the National Disability Insurance Scheme (NDIS).
It is also approved by the US Veterans’ Administration and Medicaid (in most states) as well as relationships with several private payors.
Around 78% of its revenues come from health insurers, according to Citi. That is a good thing as it makes the device accessible to the masses.
What is the CBL share price worth?
Control Bionics raised $15 million from its initial public offer in December last year as it sold shares at 60 cents a piece.
Those who jumped in have plenty to smile about as the CBL share price is currently trading at 97 cents.
But Citi believes it could go a lot higher in 2021 as it has a 12-month price target of $1.42 a share.
This leaves a lot of the profit on the table, but just remember that small cap tech stocks aren’t for the fainthearted.
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Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointerra Limited. The Motley Fool Australia owns shares of CBL Limited. The Motley Fool Australia has recommended Pointerra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post This is the latest speculative ASX tech buy from Citigroup appeared first on The Motley Fool Australia.
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