Goldman Sachs has just hosted 19 companies and 200 investors at its 14th Annual Emerging Leaders Conference.
Three ASX small and mid-cap shares that were at the event and impressed Goldman are listed below.
Here's why the broker rates them as buys:
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Data#3 Limited (ASX: DTL)
Goldman is a fan of this value-added reseller and managed services provider to the government and enterprise end-market. It has a buy rating and $9.20 price target on its shares.
The broker highlights that "DTL is not seeing any slowdown in software expenditure, both across IaaS (Azure) and SaaS (365), and is positioned to help customers rationalise costs via its optimisation offering in software licence management."
Another positive is its financial performance. Goldman notes that "DTL expects to be FCF positive for FY23, and is considering options for its excess cash as working capital unwinds (such as a special dividend)."
Objective Corporation Limited (ASX: OCL)
Another ASX share that impressed Goldman Sachs is Objective Corp, which provides specialised software solutions and implementation services that enable the digitisation of government and public sector processes. In response to its appearance, the broker has retained its buy rating and $14.80 price target on its shares.
Goldman highlights that "OCL noted that activity has been strong since January, notwithstanding some softness in federal government procurement."
And while the company's shift away from perpetual licences is having a short term impact on margins, the broker was pleased to see that other factors are expected to support a margin recovery next year. It highlights that "OCL is also pulling the pricing lever, while being careful not to gouge customers. Putting these competing forces together, OCL expects that profit margins can resume growth in FY24 vs FY23."
Temple & Webster Group Ltd (ASX: TPW)
Finally, this online furniture retailer remains in favour with analysts at Goldman Sachs. It has a buy rating and $6.50 price target on its shares.
Goldman was pleased to see that the company has responded to current economic conditions. It highlights that to "support a more value conscious shopper, the business has also invested in additional entry-level inventory which will land in 4Q23. TPW highlighted this puts it at an advantage vs. peers with a number of smaller retailers in the market unable to invest given weaker market conditions and an inability to pivot product in line with demand."
Overall, the broker believes this means that "a weaker competitive landscape provides an opportunity for TPW to pick up incremental market share of online."
