Shares in Gentrack Group Ltd (ASX: GTK) have lost much of their value over the past 12 months, but with a recent acquisition announced as well as a share buyback, the analysts at Shaw and Partners are calling the share a buy.
Share price weakness presents opportunity
Gentrack's share price peaked at $12.08 back in July last year but has been steadily trading lower since that time, changing hands now for $3.16.
Shaw and Partners says this provides an attractive entry point from a valuation perspective, despite the company's recent revenue forecast downgrade.
Gentrack said earlier this week that they expected revenue for the full year to come in at $229 to $238 million, which was "lower than our previous guidance".
They added:
Recurring revenues in FY26 are expected to grow by more than 10% to around $174 million, while non-recurring revenues will be lower than FY25. We expect H1 revenue to be about $110 million of which about $85 million is recurring.
The company did say that based on its pipeline and the market opportunity in both its utilities division and the Veovo division, which services airports, "we stand by our medium-term revenue target of more than 15% CAGR''.
Gentrack said it had taken the strategic decision to prioritise growth and global leadership over short-term earnings.
The company added:
We are continuing to invest in international expansion and product development. Furthermore, for new customer wins and upgrades, with g2.0 we are transitioning our business model to drive higher recurring revenue and lower cost for customer onboarding. In FY26, we expect full year EBITDA to be between $13.5m and $20m and H1 EBITDA to be about $7.8m (all excluding acquisition costs). With strong recurring revenue growth we expect margins to improve to our medium-term target of 15% to 20% EBITDA margin (after expensing all development costs).
The company also said it would conduct a share buyback worth up to $20 million following the release of its first-half results.
Also in late April, the company announced the US$10 million acquisition of Dubai Technology Partners, a premier airport technology business which would be integrated into the Veovo division.
Upside potential
Shaw and Partners said while the downgrade announced would be frustrating for investors, Gentrack shares were now trading on an attractive earnings multiple.
They added:
If GTK, can deliver on its pipeline, grow revenue at more than 15% and lift margins to between 15-20% this should drive a re-rate.
The Shaw and Partners team cut its price target on Gentrack shares to $8 from $11.30, still well above the stockis current price.
The post Despite a recent trading downgrade this ASX small cap could still return more than 100%: Broker appeared first on The Motley Fool Australia.
Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Gentrack Group. The Motley Fool Australia has positions in and has recommended Gentrack Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026