WiseTech Global Ltd (ASX: WTC) shares were under pressure on Wednesday.
The logistics software company's shares ended the session 10% lower at $40.89.
Is this a buying opportunity for investors? Let's see what Bell Potter is saying about the fallen star.
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What is the broker saying?
Bell Potter notes that WiseTech delivered a result that was in line with its forecasts but slightly below consensus estimates. It said:
FY26 revenue and EBITDA of US$1,396m and US$558m were in line with our forecasts of US$1,394m and US$561m but slightly below VA consensus of US$1,406m and US$569m. NPAT of US$179m was 11% ahead of our forecast of US$160m and driven by a lower tax rate (19% vs BPe 25%). Cash flow was strong with underlying OCF up 46% and a conversion rate of 100%. The final dividend of US8.8c ff was ahead of our forecast of US8.0c and was driven by the beat in EPS.
Looking ahead, management's guidance for FY 2027 was better than it expected according to the broker. But once again, it was softer than consensus estimates. It adds:
WiseTech provided FY27 revenue guidance of US$1.48 – 1.54bn which was consistent with our forecast of US$1.53bn but slightly below VA consensus of US$1.55bn. The company shifted to providing EBITDA guidance on an underlying basis and gave a range of US$725 – 780m which was consistent with VA consensus of US$761m. This implied guidance for the underlying EBITDA margin of 49-51%.
In response, Bell Potter has made both upgrades and downgrades to its near-term estimates. The broker explains:
We have downgraded our FY27 and FY28 revenue forecasts by c.2% and now forecast FY27 revenue of US$1,507m which is around the middle of the guidance range. We have, however, upgraded our FY27 underlying EBITDA forecast by 3% but left our FY28 forecast close to unchanged. We now forecast FY27 underlying EBITDA of US$745m which is more towards the lower end of the guidance range. That is, we forecast a margin of 49.4% which is towards the low end of the range.
Should you buy WiseTech shares?
According to the note, Bell Potter has retained its buy rating on WiseTech shares with a trimmed price target of $65.00 (from $71.75).
Based on its current share price, this implies potential upside of almost 60% for investors over the next 12 months.
Commenting on its buy recommendation, Bell Potter said:
In our view the issue with the result was the guidance and, in particular, the expected 45%/55% H1/H2 split in CargoWise revenue this year which implies mid single digit growth in H1 and strong double digit growth in H2. While we reflect this skew in our forecasts, we adjust for the risk in our valuation by reducing the multiples we apply in the PE ratio and EV/EBITDA and also increasing the WACC we apply in the DCF. The net result is a 9% decrease in our TP to $65.00 and we retain the BUY.
