After their big fall is it time to buy the dip on Pexa?

Pexa Group Ltd (ASX: PXA) shares took a big tumble this week after the release of a consultation paper on pricing in the New South Wales market, which could affect how much they can charge for their services.

The stock fell 17.3% on Wednesday, prompting the ASX to issue a speeding ticket to the company, asking for an explanation of why it had been sold down so heavily.

Macquarie sees this as an opportunity to buy into the stock and has a bullish price target on the company's shares, although it's worth noting that UBS has a differing opinion.

The review into pricing is still underway, however, it could have large implications for what Pexa is able to charge for e-conveyancing services.

In its own words, the company said in its statement to the ASX:

As part of its Pricing review process, yesterday IPART released a consultation Paper titled 'Methodology Paper – Initial Asset Base for an Electronic Lodgment Network Operator'. The Paper sets out a proposed approach to calculating an initial asset base and seeks submissions and feedback on the proposed and alternative methodologies prior to developing draft recommended prices for the Draft Report, which they expect to be published in June 2026. IPART's methodology paper contains information which does not constitute a decision, is open to change and contains illustrative examples which should not be read as guidance. There is no certainty at this point in time that the proposed approach will be used by IPART and, if the proposed approach is used to develop draft recommended prices, the numerical components remain uncertain and open to discussion. While the initial asset base is a key element in the 'building block' method IPART will use in their price recommendation, there are multiple other inputs including return of capital, return on capital, operational expenditure, tax adjustments and other adjustments as determined by IPART.

Pexa Group shares looking cheap?

The analyst team at Macquarie said it was difficult to discern IPART's outcome.

They ran the numbers using some assumptions, however, and said that even if price cuts of 5% to 10% were implemented, there was sufficient cost-out opportunity within the business.

Macquarie maintained its $19.60 price target on Pexa shares, compared with its current $12.97. This would constitute a 51.1% return if achieved.

Conversely, UBS has downgraded Pexa from a buy to neutral and lowered its price target for the shares from $17.50 to $15.70.

Pexa does not currently pay dividends.

Pexa Group was worth $2.28 billion at the close of trade on Wednesday.