Energy One Ltd (ASX: EOL), a rising star in the ASX technology sector, has captured the attention of broker Bell Potter, which recently initiated coverage with a buy recommendation. The company, known for its global provision of software products, outsourced operations, and advisory services, serves wholesale energy, environmental, and carbon trading markets across Europe, the UK, and the Asia-Pacific region.
Over the past 12 months, Energy One has seen its stock price soar by nearly 180%, a surge largely attributed to its robust financial performance. The company reported a revenue growth of 17% to $61.4 million in FY25, with annual recurring revenue (ARR) climbing 22% to $60.4 million. Additionally, EBITDA increased by 57% to $10.5 million, while net profit after tax (NPAT) rose by 74% to $5.9 million.
Bell Potter’s Strategic Endorsement
The recent buy recommendation from Bell Potter includes a price target of $20.80, suggesting an upside potential of approximately 18.31% from last week’s closing price of $17.58. The broker’s report highlights Energy One’s extensive reach, with over 450 customer installations in more than 30 countries and a diverse product offering of 12 different solutions.
Bell Potter emphasizes Energy One’s value proposition, which lies in its flexibility, speed of implementation, and the simplification of complex processes. The company’s ‘one-stop-shop’ approach distinguishes it from more niche competitors, offering software and services that are essential for its clients’ daily operations. This critical dependency results in high switching costs and a notably low churn rate, reinforcing a loyal customer base.
Positioned for Growth Amid Decarbonisation Trends
Bell Potter is optimistic about Energy One’s potential to capitalize on the global shift towards decarbonisation. As renewable energy becomes a larger part of the energy mix, the complexity and volatility of energy markets increase, driving demand for Energy One’s reliable software and operational support.
Recent developments in Europe, such as the quadrupling of electricity trading windows, present significant opportunities for Energy One to expand its market presence through enhanced sales strategies. Bell Potter asserts that the mission-critical nature of Energy One’s offerings not only ensures resilient earnings but also provides the company with the leverage to implement necessary price adjustments.
Future Catalysts and Strategic Opportunities
Looking ahead, potential catalysts for further growth include strategic mergers and acquisitions in Europe to accelerate expansion. Additionally, management’s commitment to achieving ambitious cash EBITDA margin targets could bolster investor confidence.
Energy One’s strategic positioning and robust financial health make it a compelling investment opportunity in the ASX technology sector. As the company continues to navigate the evolving landscape of energy markets, its innovative solutions and strong client relationships are likely to sustain its growth trajectory.
