Brokers have identified some of the leading ASX growth shares that look like opportunities.
Share prices are always changing. But sometimes an improved business performance or a change in the valuation can make a stock look like a much more attractive opportunity.
With that in mind, these two ASX growth shares are highly rated by investment experts:
Idp Education Ltd (ASX: IDP)
IDP Education is currently rated as a buy by at least three brokers including UBS. The price target by UBS on the education business is $35.90. That implies a potential upside of around 30%.
The latest insights about IDP Education came after the FY22 half-year result. Total revenue grew by 47% to $396.8 million. This included 62% growth of English language testing to $256.7 million and 73% growth of multi-destination student placement growth to $79.6 million. English language testing volumes were up 79%.
Operating leverage helped IDP Education’s earnings before interest and tax (EBIT) grow by 61% to $77.9 million. The ASX growth share’s net profit after tax (NPAT) increased by 68% to $50.8 million.
Management believes that the strategic expansion and acquisition of the British Council’s English language testing operation in the high-growth market of India ensures it is poised for long-term growth in the world’s largest English language testing market.
IDP Education also said that it’s in a strong position for growth. Its investments are paying off, leading to increased demand for services.
UBS noted that strong performance by the Indian market, with synergies with the Indian acquisition projected to reach $20 million in FY23.
On the broker’s numbers, the IDP Education share price is valued at 42x FY23’s estimated earnings.
Megaport Ltd (ASX: MP1)
Megaport describes itself as a leading global provider of elastic interconnection services. Its platform enables customers to rapidly connect their network to other services across the Megaport network.
The ASX growth share connects more than 2,400 customers in over 760 enabled data centres globally. It works with partners like AWS (Amazon), Google, Microsoft Azure, Oracle, SAP, Salesforce and Cloudflare.
It’s rated as a buy by at least three different brokers, including Citi. The Megaport share price target from Citi is $20.20, suggesting capital growth potential of almost 50% over the next year.
Citi thinks that Megaport is going to be making positive cash flow by the last six months of FY23.
In the first half of FY22, Megaport reported that the monthly recurring revenue in the month of December 2021 was $9.2 million, 46% higher than December 2020. The profit after direct costs rose 69% to $30.9 million, with a nine percentage point increase to the profit after direct costs margin to 60%.
The business is still making a net loss, but it jumped 47% to $20.2 million, compared to a loss of $38.4 million a year ago.
The ASX growth share continues to expand into other areas, with the Mexico launch planned for March 2022 with a partnership with KIO Networks to enable software-defined cloud interconnection. KIO is an IT services leader in Latin America. The initial launch includes four data centres across Mexico City and Queretaro. It will have the full suite of Megaport networks as a service (NaaS) capabilities.
The post 2 top ASX growth shares that are worth buying: brokers appeared first on The Motley Fool Australia.
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More reading
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- Brokers name 3 ASX shares to buy today
- Top brokers say there are still ASX 200 growth shares with massive upside in 2022
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Idp Education Pty Ltd and MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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