Now could be an opportune time to buy WiseTech Global Ltd (ASX: WTC) shares.
That's the view of analysts at Bell Potter, who believe this logistics solutions technology company is too cheap to ignore right now.
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What is the broker saying?
Bell Potter has been busy updating its estimates to reflect impacts from the war in the Middle East.
While this has led to modest downgrades, the broker is still expecting double-digit growth from WiseTech. It said:
We have reviewed our WiseTech forecasts and elected to take a more conservative approach in light of the conflict in the Middle East and the impact this is having on both freight volumes and the global macro environment. We have also chosen to reflect some of the risk that DSV moves part of its operations away from CargoWise onto its own in-house system, Tango, in the short to medium term. And lastly we have also reduced our e2open growth forecasts for conservatism.
The net result is revenue downgrades of 1%, 4% and 9% and EBITDA downgrades of 1%, 3% and 6% in FY26, FY27 and FY28. Note that in FY26 we now forecast revenue and EBITDA of US$1.41bn and US$564m which are within but more towards the lower end of the US$1.39-1.44bn and US$550-585m guidance ranges. We do, however, now only forecast 13% CargoWise growth in FY26 versus the guidance of 14-21%.
WiseTech shares look cheap
Despite the above, the broker believes that WiseTech shares are cheap, especially in comparison to other tech stocks like TechnologyOne Ltd (ASX: TNE). It explains:
There are no changes in the key assumptions we apply in the valuations used to determine our target price – multiples of 55x and 30x in the PE ratio and EV/EBITDA and a WACC of 8.6% in the DCF. The net result of the downgrades is a 6% decrease in our target price to $78.75 which is still a significant premium to the share price so we maintain our BUY recommendation.
We note that WiseTech is currently trading at >30% discount to Technology One on an EV/EBITDA basis in both FY26 and FY27. While we believe some sort of discount is now warranted, we believe the current discount is excessive given WiseTech has greater forecast earnings growth over the medium term and also a similar strong competitive moat due to 30 years of proprietary data, deeply embedded software and high switching costs.
As mentioned above, Bell Potter has put a buy rating and $78.75 price target on WiseTech shares. Based on its current share price of $45.49, this implies potential upside of 73% for investors over the next 12 months.
