The TechnologyOne Ltd (ASX: TNE) share price is starting the week strongly.
At the time of writing, the ASX 200 tech share is up 2.5% to $15.65.
This compares favourably to the performance of the ASX 200 index, which is down 0.35%.
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Why is this ASX 200 share charging higher?
Investors have been bidding TechnologyOne's shares higher today after they were upgraded by a leading broker.
According to a note out of Bell Potter, the broker has upgraded its shares to a buy rating with a slightly improved price target of $17.75. This implies a potential upside of more than 13% for investors over the last 12 months.
In addition, Bell Potter is forecasting a modest 1.2% dividend yield in FY 2024.
What did the broker say?
The broker made the move largely on valuation grounds following recent weakness. It also highlights that it suspects the ASX 200 tech share could bring forward its medium-term growth target when it releases its FY 2023 results later this year. Bell Potter explains:
At our updated PT of $17.75 the total expected return is c.18% [now 14%] so we upgrade our recommendation from HOLD to BUY. The obvious potential catalyst for the share price is the upcoming FY23 result – the result is scheduled to be released on 21st November – where, as indicated, we expect the result to be modestly above both the guidance and consensus. We also believe there is potential for the company to exceed its guidance of 40% growth in SaaS ARR – though we only forecast a result consistent with guidance – which would be positive but regardless of whether this happens or not we still believe the company will bring forward its $500m+ ARR by a year from FY26 to FY25.
