The S&P/ASX 200 Index (ASX: XJO) has suffered multiple sharp selloffs in the last two weeks, falling some ~3% since 11 May. ASX tech shares have taken the brunt of the selling, with the S&P/ASX200 Info Tech (INDEXASX: XIJ) down to an 8-month low.
Despite the recent underperformance in ASX tech shares, brokers are bullish on these stocks to outperform.
Which ASX tech shares?
Hansen Technologies Ltd (ASX: HSN)
Hansen is a global provider of software and services with a focus on energy, water and telecommunications industries. Its technologies help streamline and drive efficiencies in areas such as billing, data management and customer care.
Ord Minnett believes the market underestimates the organic growth potential of Hansen Technologies. The broker believes there are a number of strong industry growth drivers, especially in the telecom sector including 5G and the Internet of Things.
The Hansen share price previously surged some 40% from $4.20 on 9 March to as high as $5.88 by 15 March. The driving catalyst behind the lift in valuation was its significant contract win with German-based Telefonica. Its shares have since drifted lower to the mid $5 level.
Ord Minnett remains bullish on Hansen shares, retaining a buy rating and $6 target price on Wednesday.
Elmo Software Ltd (ASX: ELO)
Elmo’s trading update on Tuesday narrowed its annual recurring revenue guidance to $83 million – $85 million and earnings before interest, tax, depreciation and amortisation (EBITDA) to a loss between $2.5 million and $3.5 million.
Morgan Stanley believes these figures imply a re-acceleration in organic revenue growth. The broker retained its overweight rating with a $9.70 target price on Wednesday.
EarlyPay Ltd (ASX: EPY)
EarlyPay is a $100 million market cap company that delivers financial management and payroll services. Its shares are up some 8% this week following a record trading update. The company reaffirmed its FY21 net profit guidance of $8.5 million and an anticipated “material increase” in FY22 earnings.
Morgans was impressed by the record invoice finance volumes delivered by the company in March, up 34% on the prior corresponding period to $199 million. The broker retained an add rating with a 54 cent target price.
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The post Brokers back these ASX tech shares amid market selloff appeared first on The Motley Fool Australia.
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