This ASX 200 tech share has $380 million in cash and no debt but has fallen 32% this year. Is it a bargain?

Here’s what experts are predicting for WiseTech stock.

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Key points

  • ASX 200 tech stock WiseTech has tumbled 32% this year to trade at $40.70
  • It has also been dubbed a "genuine growth company" by one fundie while a major broker believes it could be on the lookout for new acquisitions
  • However, they are at odds over whether the company is trading at bargain prices right now

S&P/ASX 200 Index (ASX: XJO) tech share WiseTech Global Ltd (ASX: WTC) has been savaged this year. But there could be much brighter days ahead for the logistics software provider.

At the time of writing, the WiseTech share price is $40.70. That’s 32% lower than it was at the start of 2022.

For context, the ASX 200 has slumped 7% in that time. Meanwhile, the S&P/ASX 200 Information Technology Index (ASX: XIJ) has plunged 33%.

As of the end of the last half, the tech stock had $380 million in cash and no debt. On top of that, experts are tipping it as a “genuine growth company”. Is the stock one to look at in 2022?

Experts weigh in on the WiseTech share price

WiseTech could be one of its sector’s hidden gems, according to brokers and fund managers.

Marcus Today portfolio manager Ben O’Leary told The Motley Fool Australia’s Tony Yoo earlier this year the company is one to look out for.

“They are a genuine growth company with wins that are about benefiting from the longer-term structural changes in the shipping industry,” O’Leary said.

The fundie also likes WiseTech’s revenue stream and its low level of customer churn. Around 90% of the company’s revenue is recurring while its customer loss has been below 1% for more than nine years.

“We know customers are a really important thing in the long-term success of any business,” O’Leary continued. “[WiseTech] really do get people on board and keep them on board.”

Meanwhile, Macquarie brokers think the company could be hunting for new acquisitions, reports the Australian Financial Review (AFR).

Long-term investors will remember the company’s previous years as an ASX 200 acquisition machine.

The broker reportedly estimated the company’s cash balance could grow to $772 million by financial year 2024. That could see it looking for enterprises to buy.

Is WiseTech an ASX 200 bargain?

While it all sounds very rosy, the experts warned investors to be wary of tech stocks in 2022.

“[T]hey are a high-growth tech company, so they are going to be pushed on the valuation grounds when the market gets worried about that, which they have recently,” O’Leary told Yoo.  

“It’s a little bit at the whims of what the central banks decide to do, but … from our perspective, it’s mostly priced in and the tailwinds behind it will hopefully outweigh that.”

Macquarie has been quoted by the AFR as saying:

WiseTech is still looking expensive on an enterprise value-to-sales multiple versus its own history, the company is now trading in-line with its historical one-year forward enterprise value-to-earnings before interest, tax, depreciation, and amortisation (EBITDA) multiple and is thus looking fairly valued.

Macquarie reportedly has a $45 price target and a ‘neutral’ rating on WiseTech shares.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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