- The information technology index was the worst performing sector on the ASX on Wednesday, falling nearly 3%.
- Tech shares were hit after surging bond yields weighed on US investors, triggering them to move out of fast-growing technology shares.
- According to analysts, a fall in ASX-listed tech stocks has created opportunities for investors looking for value.
The information technology index was the worst performing sector on the ASX on Wednesday, falling nearly 3%, after surging bond yields weighed on US investors, triggering them to move out of fast-growing technology shares. This week, the US Treasury yields rose to their highest levels since late June.
On Wednesday, major US tech shares such as Alphabet, Apple, Facebook, and Microsoft fell to a low of 4%, weighing on the S&P 500 and tech-heavy NASDAQ. However, on Thursday, Australian shares rebounded slightly and regained some of their heavy losses from the past two days.
According to analysts, the fall in ASX-listed tech stocks has created opportunities for investors looking for value. Considering Thursday’s rebound, bargain hunters may have sensed the opportunity to lap up relatively cheap shares, which otherwise traded at expensive valuations.
However, investors should be careful now and conduct extensive research before picking up recently beaten tech shares. Investors should currently not only look at reduced prices but also strong growth potential before buying the shares.
Since Australian tech shares have so far benefitted from the extended era of ultra-low interest rates, looming interest rate hikes could act as a risk to this high-growth sector.
Here are three ASX-listed tech shares that can be looked at:
WiseTech Global Ltd (ASX:WTC)
Among all WAAAX shares - WiseTech Global Ltd (ASX: WTC), Afterpay Ltd (ASX: APT), Appen Ltd (ASX: APX), Altium Limited (ASX: ALU), and Xero Limited (ASX: XRO) – WiseTech is the only stock to have gained significantly in this calendar year despite a pullback from growth in 2021 for most shares in the group. It has gained over 70% this calendar year.
In FY2021, the company outperformed its guidance. Total revenue was up 18% to AU$507.5 million. While net profit after tax (NPAT) doubled to AU$105.8 million, earnings before interest, tax, depreciation and amortisation (EBITDA) rose 63% to AU$206.7 million.
The stock is up nearly 71% year to date (YTD). The stock has gained 102% in the past year. The stock’s 52-week high is AU$57.31.
In the past five days, the stock was down nearly 5%. At 11:40 AM (AEST), the stock was trading at AU$52.12.
Bigtincan Holdings Ltd (ASX:BTH)
Bigtincan shares fell over 4% on Wednesday. The stock is down over 3% in the past one year and up nearly 19% YTD. The stock’s 52-week high is AU$1.56.
In the past five days, the stock was down 7%. At 11:40 AM (AEST), the stock was trading at AU$1.27.
On Wednesday, the stock declined despite its announcement of bagging a new contract. Bigtincan signed a contract with Asurion, LLC, for the deployment of Bigtincan’s Sales Enablement platform.
The contract is valued at around AU$2 million for 36 months. The software will be used by Asurion channel partners across North America to deliver training, communications, etc.
Meanwhile, recurring revenues of the growing provider of enterprise mobility software have been growing strongly in recent years.
In FY 2021, the company delivered a 48% increase in annualised recurring revenue (ARR) to AU$53.1 million. The company expects the same to continue in FY2022. It has provided an ARR guidance of AU$119 million for FY2022.
Xero Ltd (ASX:XRO)
The stock fell nearly 4% on Wednesday. The stock is up over 36% in the past one year and down 7% YTD. The stock’s 52-week high is AU$157.99.
In the past five days, the stock was down 8%. At 11:40 AM (AEST), the stock was trading at AU$137.54.
The provider of a cloud-based business and accounting solution to small- and medium-sized businesses has been reporting robust growth for many years. The growth is expected to continue due to companies’ shift to the cloud, acquisitions, and global expansion.
The company recently rolled out its App Store in the ANZ and UK markets, allowing it to earn royalties on third-party apps that its subscribers use.
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