The WiseTech Global Ltd (ASX: WTC) share price has fallen a lot over the past month. Could the ASX tech share now be a major opportunity?
For readers that aren't sure what WiseTech does, it describes itself as a leading provider of software to the logistics execution industry globally. It has over 18,000 global logistics companies as customers across 165 countries, including 42 of the top 50 global third-party logistics providers and 24 of the 25 largest global freight forwarders worldwide.
Its key platform is called CargoWise.
What's happening to the WiseTech share price?
Lots of ASX shares, particularly ones that are often labelled as ASX growth shares, have seen price declines in 2022 amid high inflation and commitments by central bankers that they will keep increasing interest rates to bring inflation back to a more normal level.
Since the start of 2022, the Xero Limited (ASX: XRO) share price has fallen nearly 40%, the Altium Limited (ASX: ALU) share price has dropped 31% and the Seek Limited (ASX: SEK) share price has fallen around 25%.
The WiseTech share price has not been missed in the sell-off by investors, falling by around 30%.
Why do interest rates matter for asset valuations? Billionaire Ray Dalio once explained:
It all comes down to interest rates. As an investor, all you're doing is putting up a lump sum payment for a future cash flow.
However, WiseTech continues to see growth, with rising profit margins.
FY22 half-year earnings wrap
The first half of FY22 saw total revenue rise 18% to $281 million, with CargoWise revenue up 29% to $193 million, driven by new customer wins, price and increasing existing customer usage.
It said that market penetration momentum is continuing, with two new global rollouts secured in the first half of FY22, including FedEx.
The company is also working on improving its efficiencies. An organisation-wide efficiency and acquisition synergy program is 'well-progressed' with $20.2 million of gross cost reductions in the first half of FY22. It said it's on track to achieve a cost reduction run-rate of around $45 million for FY22, beating its previous target of around $40 million.
Operating leverage saw the business grow its earnings before interest, tax, depreciation and amortisation (EBTIDA) by 54% to $137.7 million and underlying net profit after tax (NPAT) went up by 77% to $77.3 million.
In FY22, the company is expecting revenue growth of between 18% to 25%, representing revenue of between $600 million to $635 million.
It also upgraded its FY22 EBITDA growth guidance to a range of 33% to 43%, up from 26% to 38%. The new guidance represents a range in dollar terms of between $275 million to $295 million.
Is the WiseTech share price a buy?
Despite the decline, Citi has just affirmed its neutral target on the business with a price target of $46.35 because of the recent slowing of freight volumes, which could impact WiseTech's revenue because it generates revenue from the number of transactions. Therefore, revenue may be at the lower end of the FY22 revenue guidance, which is stated above.
However, Ord Minnett rates the business as a buy with a price target of $52.
Both brokers are expecting growth in the short-term for WiseTech.
