Citi sees headwinds for Aussie tech stocks in FY23

Netwealth

19/09/2022 23:05

** Citi sees more downside to consensus for revenue and
earnings before interest, tax, depreciation and amortisation in
FY23 results for Australian technology stocks  .AXIJ  due to
slowing economic growth and potential recession fears 
    ** However, the broker notes that August reporting season
was better than expected, as most companies did not see a
slowdown on weak macro environment, with only Appen  APX.AX  and
Zip  ZIP.AX  forecasting revenue downgrades 
    ** It expects cos to reduce cost growth in an uncertain
environment, which could result in profitability or margins
being stronger than expected
    ** Regarding individual stocks, brokerage downgrades
WiseTech  WTC.AX  to "Sell", due to a stretched valuation,
although its FY results was powered by revenue benefiting from
higher-than-expected price increases   
    ** Also, it remains "neutral" on Altium  ALU.AX . However,
sees downside risk to FY23 earnings from weaker-than-expected
license sales    
    ** On the positive side, it sees an upside to earnings of
Netwealth  NWL.AX  from cash margins 
    ** The Australian tech index has dropped 30.7% YTD, compared
to 9.7% decline on the  .AXJO 

 (Reporting by Archishma Iyer in Bengaluru)
 ((Archishma.Iyer@thomsonreuters.com;))