If you're wanting to get exposure to the rebounding tech sector, then read on!
The two ASX tech shares listed below have recently been tipped as buys and named on the best ideas list of Morgans.
Here's why it is bullish on these tech shares:
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Aristocrat Leisure Limited (ASX: ALL)
Morgans is very positive on this gaming technology company and has put an add rating and $43.00 price target on its shares.
The broker likes Aristocrat due to its strong balance sheet, positive organic growth outlook, capital light operation, and M&A optionality. The latter is underpinned by almost $4 billion of available liquidity. The broker explained:
We have three key reasons for being positive on ALL. They are: (1) long-term organic growth potential. ALL is better capitalised than many of its competitors and has what we regard as a strong platform to continue investment in design and development in both its land-based gaming and digital businesses;
(2) strong cash conversion and ROCE. ALL is a capital-light business despite its ongoing investment in Gaming Operations capex and working capital. It has a high level of cash conversion and ROCE and (3) strong platform for investment. ALL has funding capacity for organic and inorganic investment in online RMG, even after the recent buyback. Its current available liquidity is $3.8bn.
NextDC Ltd (ASX: NXT)
Another ASX tech share that Morgans is bullish on is NextDC. It is a leading data centre operator that owns a growing portfolio of world class centres across the country. The broker has an add rating and $13.30 price target on its shares.
Morgans expects NextDC to benefit from very strong structural demand for data centre services and is forecasting strong operating earnings growth in the coming years. It commented:
NXT should deliver another good set of results in FY23 with some upside risk to guidance, in our view. Structural demand for cloud and colocation remains incredibly strong. NXT's new S3 and M3 data centres are now open.
Consequently, we expect significant new customer wins over the next six-to-twelve months (including CSP options being exercised). Sales should drive the share price higher. NXT looks comfortably on-track to generate over $300m of EBITDA in the next three to five years.
