Investors that are looking for mid-cap exposure in FY 2024, might want to check out the shares that Goldman Sachs is currently tipping as buys.
Here’s what you need to know about them:
Data#3 Limited (ASX: DTL)
The first mid-cap ASX share to look at is Data#3. It is a value-added reseller and managed services provider to the government and enterprise end-market.
Goldman Sachs currently has a buy rating and a $9.20 price target on its shares. This implies a potential upside of 28% from current levels.
The broker has been pleased with its performance this year and suspects that it could be in a position to reward shareholders with a special dividend. It commented:
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.
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 mid-cap ASX share that Goldman Sachs is bullish on is Objective Corp.
It is a provider of specialised software solutions and implementation services that enable the digitisation of government and public sector processes.
Goldman currently has a buy rating and a $14.90 price target on its shares. This suggests a potential upside of 9% from current levels. The broker commented:
We are attracted to management’s track record of growth and margin expansion and see upside being driven from 1) new products including Build and RegWorks; 2) resumption of margin expansion from FY24E as near-term cost headwinds are cycled; and 3) M&A, possibly in the US given the large market opportunity. When adjusting for OCL’s conservative accounting (100% of R&D expensed), robust growth outlook, defensive end markets and high franchise quality, we see valuation appeal compared to SaaS peers and believe the shares can outperform in a more challenging macro environment.
