S&P/ASX 200 Index (ASX: XJO) tech stock Technology One Ltd (ASX: TNE) has enjoyed a stellar run over the past 12 months.
How stellar?
Well, one year ago, you could have bought shares in the software-as-a-service (SaaS) provider for $16.29 apiece. In late morning trade today, those same shares are swapping hands for $32.72 apiece.
That's a gain of 100.9%. Or enough to turn a $5,000 investment into $10,045 in just one year. Atop those share price gains, Technology One shares also trade on a slender 0.7% partly franked dividend yield.
To put this one year-performance in some context, the ASX 200 has gained 6.4% over this same period.
But with that kind of strong run behind it, is it too late to buy the ASX 200 tech stock today?
We'll have a look at what the analysts from Macquarie Group Ltd (ASX: MQG) have to say on that matter below.
But first…
The last price-sensitive news from Technology One was the release of its full-year FY 2024 results on 19 November.
Shares in the ASX 200 tech stock closed up 10.1% on the day as investors reacted enthusiastically to the company's strong growth metrics.
Highlights included a 17% year-on-year increase in total revenue to $515.4 million and a 19% increase in revenue from the company's SaaS and recurring business.
On the bottom line, Technology One achieved an 18% year-on-year boost in profit before tax to $152.9 million. That topped management's profit growth guidance of 12% to 16%.
"Our ability to deliver these results is due to Technology One's clear vision, strategy, culture and our significant investment in R&D" CEO Ed Chung said on the day.
Which brings us back to our headline question.
With the ASX 200 tech stock having already soared more than 100% in a year, Macquarie's analysts are taking a cautious position.
In a research report released on 14 May, they noted:
We continue to like the medium-term story, but at this point in the cycle, with SaaS+ margin headwinds on UK traction and on 32 times 2-year forward earnings before interest, taxes, depreciation and amortisation (EBITDA), there's little margin for error.
Macquarie maintained its neutral rating on Technology One shares, with a 12-month price target of $31.00 for the ASX 200 tech stock.
The broker cited several factors that could see the share price rise materially higher than its forecast.
According to Macquarie, "Stronger-than forecast ARR [annual recurring revenue] growth or transition to SaaS could result in upside risk to our forecasts."
And higher-than-expected inflation could also provide tailwinds for Technology One shares.
"TNE has CPI linked contracts with its customers. Upside risk to earnings in a market with stronger than-anticipated levels of inflation," Macquarie said.
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