Top 3 Tech Stocks to Watch in July 2020

We examine three small-cap tech stocks that Shaw and Partners currently have Buy ratings on

Confidence returns to equity markets, questions remain

The ASX 200 benchmark has surged over 30% from the lows it recorded in March, as confidence returns to equity markets across the globe. Even so, concerns persist, with the global coronavirus case count recently surpassing 10 million.

Concerns or not, tech has performed especially strongly in the last few months, with the Nasdaq Composite in June trading past all-time highs. More locally, the likes of Appen, Afterpay and Xero have been strong performers since March.

With that in mind, below we look at the recent share price performance of three ASX-listed, small-cap tech stocks that Shaw and Partners analysts currently have Buy ratings on.

  1. Audinate
  2. HUB24
  3. Rhipe

Audinate Group share price: growth remains difficult to predict

Digital Audio-Visual (AV) networking technologies Audinate Group (AD8) has seen its share price rise ~55% in the last three months, significantly outperforming the benchmark ASX 200.

This comes after the firm in April withdrew its FY20 growth commentary, as a result of the coronavirus pandemic; though assured investors that it 'remains well-positioned with a strong balance sheet and recent revenue growth.'

Covid-related issues aside, analysts at Shaw continue to favour the stock: retaining their price target of $8.00 per share and a Buy rating on Audinate. Shaw analysts have assigned the stock a High Risk rating.

At Audinate’s closing price on 29 June, the above price target implies potential upside of ~48%.

HUB24 share price: is a strong quarter coming?

Investment and superannuation solutions company HUB24 (HUB) has seen its share price rise 24.66% in the last three months, even as the March quarter proved to be worrisome for the firm.

Unsurprisingly amid the market chaos from the first quarter of CY20, HUB reported in April that the 'Negative market movement for the quarter resulted in a FUA [funds under management] reduction of $2.1 billion.'

Looking forward, investors will likely be keen to see if and/or by how much, HUB's FUA position has improved following the market's strong recovery since the lows it recorded in March.

Market gyrations aside, Shaw analysts have a price target of $12.00 per share and a Buy rating on HUB – implying upside potential of ~30% from the 29 June close.

The stock, like Audinate, has a High Risk rating.

Rhipe share price: high risk and potential upside

Self-described as a 'market leader for cloud and service provider software licensing in Australia and New Zealand', Rhipe (RHP) has seen its share price rebound strongly since March, rising 38.95% in that period.

In April, Rhipe successfully raised $34 million in fresh capital from institutional and supplicated investors, in a move aimed at strengthening the firm's balance sheet and giving the company optionality to pursue complimentary acquisitions.

Following that raise, Shaw continues to see upside potential from Rhipe: the broker has a Buy rating and a price target of $2.85 per share on the stock – implying potential upside of ~43%, based on RHP’s closing price on Monday, 29 June.

Like the other two small-cap tech stocks discussed above, Shaw has a High Risk rating on Rhipe.

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