Mesoblast Ltd (ASX: MSB) shares could be seriously undervalued.

That’s the view of the team at Bell Potter, which remains very bullish on the biotechnology company’s shares.

What is Bell Potter saying?

Bell Potter was pleased to see that Mesoblast’s Ryoncil product is building momentum. This saw Mesoblast report sales in line with the mid point of its guidance range. It said:

MSB has reported 4Q26 revenues of US$36m (+20% vs 3Q26) in line with our forecast. FY26 revenues for Ryoncil totalled US$115m which is the mid point of guidance (i.e. US$110m – $120m). The full year result represents an outstanding result considering the product was launched from a standing start in April 2025, prior to broad reimbursement availability. 

Commercial adoption has been exceptionally strong and has continued to grow as barriers to adoption have fallen away – particularly for reimbursement. We expect Group revenues for FY26 of US$121m inclusive of Temcel royalties (Japan).

Looking ahead, the good news is the broker continues to believe that sales will grow strongly in FY 2027. It adds:

Our forecast for FY27 Ryoncil sales remains bullish at US$275m relative to the annualised exit rate of US$144m. The implied quarterly growth rate is ~27% compounding. We continue to believe this is achievable given the progress in recent months on two key fronts: a) expansion of the key account manager team servicing this market – 6 additional FTEs being hired to service large markets in the north eastern US and California; and b) MSB has only recently begun to gain traction with the very largest transplant centres in the US, both on the east and west coast. 

The forecast also includes a small revenue stream from off label use amongst young adults, where some payers have reimbursed hospitals for off label use in isolated cases following patients failing on SOC for SR aGvHD. For these reasons, we retain our FY27 forecast.

Mesoblast shares tipped to double

According to the note, Bell Potter has effectively upgraded Mesoblast shares to a buy rating (from speculative buy) and held firm with its $4.45 price target. This is approximately double its current share price. It concludes:

MSB is expected to commence submission of the various modules of the Biological Licence Application for Rexlemestrocel-L in heart failure and commence recruitment of the adult study in GvHD (for Ryoncil). We expect MSB will also engage in preliminary discussions with distributors for Rexlemestrocel-L in the chronic lower back pain indication, ahead of the phase 3 readout in mid CY27. 

Investment thesis: TP $4.45 (unchanged) There are no changes to earnings and we retain our $4.45 target price and Buy rating. As MSB is generating strong revenue growth the Speculative risk rating is no longer warranted.

The post Why Mesoblast shares could double in value 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 no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I believe ASX growth shares have excellent potential to deliver long-term returns because of their ability to compound earnings at a strong rate.

I’m going to highlight three investments I expect big things from over the next three to five years, which I’d happily invest $20,000 in.

Below are two of the ASX’s leading growth companies and one compelling exchange-traded fund (ETF).

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is one of the leading online retailers in Australia, selling hundreds of thousands of homewares and furniture through its website. A significant portion of the items are shipped straight from the supplier, reducing the need for the company to hold inventory and warehouse space – it creates a capital-light model for the business.

The company is growing rapidly and this is steadily giving it stronger scale benefits. Plus, it’s deploying technology and AI throughout its business, which is helping with costs and boosting customer conversion.

During this period of weaker consumer conditions, the ASX growth share is focused on increasing profitability. It expects to approximately double its operating profit (EBITDA) in FY27, even if trading conditions are challenging.

Over the longer-term, I expect rising e-commerce adoption in Australia can help the company increase its market share further. I’m also hopeful that the home improvement segment can continue growing in size and become a significant contributor in the coming years – home improvement revenue rose 46% in HY26 off a small base.

According to the projections on Commsec, the ASX growth share could grow its earnings per share (EPS) by around 160% between FY26 and FY28, with it trading at 32x FY28’s estimated earnings at the time of writing.

Global X S&P World Ex Australia GARP ETF (ASX: GARP)

This is an ETF focused on finding quality growing businesses at a reasonable price, with solid financial strength. There are 250 international businesses in this portfolio that demonstrate ‘GARP’ characteristics – it offers good diversification across countries and sectors.

There are three boxes that stocks need to pick. First, they must demonstrate growth with both sales and earnings. Second, they should be good value on a price to earnings (P/E) ratio basis. Third, they must be quality in terms of low debt levels a high return on equity (ROE).

This high-quality fund has an annual management cost of just 0.3%. Impressively, it has delivered an average return per year of 17.5% since inception in September 2024. Of course, past performance is not a guarantee of future performance.

L1 Group Ltd (ASX: L1G)

Plenty of funds managers go through ups and downs, which can give investors buying opportunities. L1 is a highly respected funds management business with a compelling future with a number of high-performing funds.

Some of its funds like L1 Global Long Short Fund Ltd (ASX: GLS) have a strong track record for delivering returns, which is a very powerful tailwind for growth of funds under management (FUM) and management fees. The great returns also help attract more FUM.

The ASX growth share has highlighted a number of other factors that could help earnings rise in the coming years such as joint ventures, acquiring other fund managers and launching more strategies.

Additionally, the business is working on unlocking synergies from the Platinum acquisition.

According to the projection on Commsec, the ASX growth share is valued at 23x FY27’s estimated earnings and is forecast to grow earnings per share (EPS) by 25.5% in FY27.

The post Where I’d invest $20,000 into ASX growth shares right now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Temple & Webster Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group. The Motley Fool Australia has recommended Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ASX is home to thousands of potential investments, though the biggest companies get the most attention. The smaller ASX shares could actually be some of the most compelling investments to own right now.

It’s quite easy to underestimate how much of a difference compounding can make to a company’s financial progress and what that can do for shareholders.

Fund managers from the listed investment company (LIC) WAM Active Ltd (ASX: WAA) have revealed two compelling ideas. WAM Active looks for mispriced opportunities in the Australian market.

Impressively, the WAM Active portfolio has returned an average of 14.4% per year since inception in January 2008, before fees, expenses and taxes. That shows the investment team are adept at picking ideas. Let’s look at the two names that WAM highlighted.

Solstice Minerals Ltd (ASX: SLS)

WAM described Solstice Minerals as a copper-gold exploration company advancing its Nanadie Project in Western Australia.

Last month, the company released updated drilling results from its first diamond drilling program. This confirmed the mineralised system extends to a depth of more than 600 metres and remains open at depth.

The fund manager also noted the ASX share’s drilling showed mineralisation continues well below the existing resource, which highlights the potential for the deposit to grow.

WAM said these results build on earlier drilling and continue to demonstrate the scale and continuity of the system.

The investment team concluded that the project currently hosts a 40.4 million tonnes mineral resource estimate and WAM believes the latest results highlight the potential for the resource to grow as drilling continues.

Southern Cross Electrical Engineer Ltd (ASX: SXE)

The other ASX share that WAM highlighted in the WAM Active portfolio was Southern Cross Electrical Engineering, a national provider of electrical, instrumentation and communications services. It also has growing exposure to data centres, infrastructure and electrification projects.

The fund manager noted that, last month, the company upgraded its earnings guidance and strengthened its balance sheet with a capital raising to support further growth.

WAM also said that the ASX share secured more than $150 million of new projects, including work linked to data centre construction.

With that update, Southern Cross Electrical Engineering upgraded its guidance for FY26 underlying operating profit (EBITDA) to at least $75 million, while introducing FY27 EBITDA guidance of at least $100 million.

WAM concluded:               

We believe the company is well positioned to continue growing earnings, supported by demand for data centre capacity and broader electrification trends, with the strengthened balance sheet providing flexibility to pursue further growth opportunities.

The post Leading fund manager reveals 2 exciting ASX shares to buy appeared first on The Motley Fool Australia.

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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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Southern Cross Electrical Engineering. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.