It has been a difficult 12 months for WiseTech Global Ltd (ASX: WTC) shares.
During this time, the logistics solutions technology company's shares have lost 65% of their value.
Is this a buying opportunity for investors? Bell Potter thinks it is.
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Bell Potter on WiseTech shares
The broker has been looking at the company's progress in getting large customers over to its CargoWise Value Packs.
It suspects that this is proving harder to accomplish than first expected. Bell Potter explains:
WiseTech CEO Zubin Appoo said at the 1HFY26 result in February he was "confident and hopeful" that the company would migrate some of the remaining 5% of customers – representing c.30% of CargoWise revenue – across to CargoWise Value Packs (CVP) this financial year. As of yet, however, there has been no announcement or indication that one or more of these customers have moved across so we suspect it is proving more difficult or at least more time consuming to achieve this outcome.
In light of this, the broker has trimmed its revenue forecasts. It adds:
As a result we are modestly reducing our CargoWise revenue forecasts in the short to medium term given we expect this transition to provide a boost to revenue with the shift to transaction-based pricing. We also see some risk that WiseTech may have to provide greater incentives for these customers to shift – such as transitional price protection (TPP) or additional training – which would also have a negative impact.
Bell Potter remains bullish on WiseTech shares
According to the note, Bell Potter has retained its buy rating on WiseTech shares with a trimmed price target of $71.75 (from $78.75).
Based on its current share price of $38.05, this implies potential upside of almost 90% for investors over the next 12 months.
Commenting on its recommendation, Bell Potter said:
We have reduced the multiples we apply in our PE ratio and EV/EBITDA valuations from 55x and 30x to 50x and 27.5x and also increased the WACC we apply in the DCF from 8.6% to 8.8% given the lack of apparent progress in shifting large customers to CVP and the resulting downgrades in our forecasts.
These changes combined with the downgrades have resulted in a 9% decrease in our TP to $71.75 which is still, however, a significant premium to the share price so we maintain our BUY recommendation. That is, we believe the lack of progress is already reflected in the share price as well as the risk of a revenue result at the low end of guidance.
