Top broker says ASX 300 tech stock has 18% upside after sell-off

ASX 300 investors overreacted in punishing the high flying tech stock yesterday, this top broker says.

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S&P/ASX 300 Index (ASX: XKO) tech stock Nuix Ltd (ASX: NXL) has been a stellar performer over the past year.

How stellar?

Well, one year ago you could have bought shares in the investigative analytics and intelligence software provider for $1.48 apiece.

In early afternoon trade today, shares are up 3.4% at $6.10.

That sees this ASX 300 stock up an eye-watering 312% in just 12 months.

Or enough to turn a $6,000 investment into $24,720.

Created with Highcharts 11.4.3Nuix PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

But not every day has been positive for shareholders.

Yesterday, the Nuix share price closed down a painful 22.2% on the heels of the company's annual general meeting (AGM), which included a trading update.

What happened at the AGM?

Investors were quick to hit their sell buttons after Nuix's half-year results fell short of the company's strategic financial targets for the full year FY 2025.

According to Nuix CEO Jonathan Rubinsztein, the ASX 300 stock is targeting 15% average contract value (ACV) growth in constant currency over FY 2025.

The company also remains focused on the ongoing successful rollout of its data solutions platform, Nuix Neo. And Nuix aims to see revenue growth exceed operating cost growth while achieving positive underlying cash flow for the full year.

"The good news is that the ASX stock continues to target these metrics for FY 2025. The bad news is that it seems apparent that its first half performance will be well short of them, " my Motley Fool colleague James Mickleboro wrote following the AGM.

According to Rubinsztein:

We continue to execute on our strategy, and I take the opportunity today to reiterate these targets.

Nuix's sales are not linear over the course of the year, and our current expectations are that growth will be weighted towards the second half of the fiscal year.

Why this top broker remains bullish on the ASX 300 stock

Shaw & Partners' analyst Jules Cooper believes investors overreacted in selling down the ASX 300 stock yesterday.

"Potentially, the market is reacting to the comment that 'sales are not linear over the course of the year, and our current expectations are that growth will be weighted towards the second half of the fiscal year'," Cooper said (courtesy of The Australian).

Cooper continued:

NXL's operations don't follow a typical 1H/2H seasonal skew but the timing of incremental ACV is dependent on the timing of renewals and closing new business.

We expect this statement highlights that a greater proportion of renewals are scheduled for the 2H and the timing of new business closing might be also. In our view, this does not highlight a change in demand or a change in execution success.

As such, we view the commentary as being on-track and in-line with prior communications.

Cooper maintained his buy rating on Nuix with a $7.20 price target on the ASX 300 stock. That represents a potential upside of 18% from current levels.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nuix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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