Company Interview / David's defensive software picks

Key points:

Focus on defensive tech stocks amid AI-driven volatilityBuy ratings for Energy One (ASX:EOL), Vista Group (ASX:VGL) and ReadyTech (ASX:RDY)Accumulate on Hansen Technologies (ASX:HSN), hold on Technology One (ASX:TNE)Digi Co highlighted for data centre growth potential

David Lane from Ord Minnett spotlights defensive plays within the Australian technology sector, noting AI trends have fuelled a 30% surge in the local software market. Lane identifies Energy One (ASX:EOL) as a standout, highlighting its specialist position in the highly regulated energy industry and suggesting that AI will enhance rather than disrupt its operations. Lane sees substantial earnings potential and classifies the stock as a defensive option with an attractive valuation, maintaining a buy rating and a target price of $24.47.

Hansen Technologies (ASX:HSN) earns Lane’s accumulate recommendation, attributed to its strong management, track record of effective acquisitions, and resilient client relationships. Though deemed more conservatively run and not as attractively priced as Energy One or Vista Group (ASX:VGL), Lane sees further upside along with medium risk, assigning a target price of $6.78. Vista Group, meanwhile, is appreciated for its embedded customer base in the film and streaming sectors, though Lane cautions its higher risk profile despite a buy rating and a $3.22 target.

Lane maintains a hold on Technology One (ASX:TNE) due to valuation, yet commends its robust business model and legacy clients. Additional mentions include ReadyTech (ASX:RDY), considered risky but opportunistic after a sector-wide selloff, and data centre operator Digi Co as a beneficiary of AI-driven expansion