Citi has downgraded its short-term share price target for Wisetech, maintaining a “buy” rating for the ASX-listed global logistics software company. Wisetech is a global developer and provider of software solutions for the logistics industry. Their flagship product, CargoWise, facilitates logistics operations across the world.
Wisetech shares experienced a significant drop, plunging approximately 12 per cent to $102 last Wednesday. This decline followed the company’s annual revenue announcement, which fell short of analyst expectations, and underwhelming sales guidance for its CargoWise product. The company reported an annual revenue increase of 14 per cent, reaching $US778.7 million ($1.2 billion) for the full year ending June 30, slightly below analyst projections.
Despite the revenue miss, WiseTech anticipates a substantial revenue increase of about 80 per cent in the upcoming year, projecting revenues of $US1.4 billion. This expected growth is largely attributed to its $US2.1 billion acquisition of US-based rival e2open. Citi analyst Siraj Ahmed reaffirmed his “buy” rating for Wisetech, albeit with a reduced short-term share price target, lowered by 9 per cent to $121.35. This implies an underlying growth potential of over 22 per cent from its closing price of $99.04 on Tuesday.
Ahmed commented on the acquisition of E2open, noting that while it introduces increased execution risk, it is expected to accelerate the growth of CargoWise. This acceleration will be achieved by enhancing freight-forwarder solutions and expanding into the beneficial cargo-owner segment, according to Ahmed’s analysis.
