Is this buy-rated ASX 300 tech stock a future star?

It is fair to say that Hansen Technologies Limited (ASX: HSN) doesn't get anywhere near as much attention as the likes of Life360 Inc (ASX: 360) or Xero Ltd (ASX: XRO).

But that doesn't mean that this ASX 300 tech stock isn't a high-quality option with a bright future.

Just ask the team at Goldman Sachs, which are tipping the billing and customer care solution provider's shares as a buy right now.

What is the broker saying about the ASX 300 tech stock?

Goldman was pleased with Hansen's annual general meeting update, which saw management reiterate its belief that it can continue to grow its revenue organically by 5% to 7% each year for the foreseeable future. It said:

HSN's AGM update highlighted mgmt's view that +5-7% organic revenue growth is sustainable, driven by structural digital transformation tailwinds across both verticals. Per our analysis, HSN's FY25E guidance implies that sales in the core business (ex Powercloud) are accelerating to ~8% y/y in FY25E, following a trend that started in FY20A of consistent improvements in organic growth. HSN is in late-stage discussions for several large-sized contracts (some >A$30mn in TCV), which may be incremental to the +5-7% range in FY25E (and/or support an increase to the revenue growth guidance in future years).

The broker also sees the recently acquired Powercloud business as a significant driver of growth in the future. Goldman believes that once its cost outs are complete, it will hit an earnings inflection. Goldman adds:

Bringing forward profitability to 2H25E (vs 4Q25E) and providing detail around cost-out execution (incl. reducing headcount from 390 to 140) increases our confidence in HSN's ability to bring Powercloud's margins toward ~30% (FY27 GSe), particularly given headcount was ~50 before Powercloud's global expansion (i.e. further room to cut costs). HSN's stated ~A$27mn of annualised cost-out to date is almost 50% of Powercloud's pre-acquisition cost base and in our view implies Powercloud should be entering FY26E generating ~A$10-15mn of annualised EBITDA – a key pillar of HSN inflecting from +7% EBITDA growth in FY25E to +24% in FY26E (we sit +6% vs FY26E VA Cons.).

Big returns

Goldman thinks that the ASX 300 tech stock is being undervalued by the market. It explains:

We believe FY26E is the appropriate year to capitalise into valuation as Powercloud moves into profitability. On this basis, HSN is trading on 9.4x EV/EBITDA (vs ~11x historical average), and is on 0.7x growth-adjusted vs 1.5x AU Tech peers.

In light of this, the broker has retained its buy rating with an improved price target of $6.35. Based on its current share price of $5.57, this implies potential upside of 14% for investors. In addition, a 1.8% dividend yield is expected in FY 2025.

The post Is this buy-rated ASX 300 tech stock a future star? appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has positions in Life360 and Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, Life360, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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