A couple of years ago, the idea of WiseTech Global Ltd (ASX: WTC) shares falling to $50 would have seemed almost unthinkable.
The logistics software company was growing rapidly, investors were willing to pay extraordinary valuations for that growth, and it seemed the share price could only keep climbing.
Things look quite different today.
With WiseTech shares trading around $32.09, $50 is now a target that would require a substantial recovery.
But could the company get there in 2027 or 2028?
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What happened to WiseTech shares?
WiseTech has had a difficult couple of years, and there is more to the share price collapse than a simple change in market sentiment.
Governance controversies surrounding founder Richard White have damaged investor confidence, artificial intelligence (AI) disruption concerns have weighed on sentiment, while the acquisition of e2open has brought integration costs, additional debt, and questions about execution.
The business has also been changing rapidly.
WiseTech is embedding AI into its products and operations, restructuring its workforce, and moving CargoWise customers towards a new commercial model.
That shift away from traditional seat-based fees towards transaction-driven revenue could eventually prove valuable. But investors understandably want to see how it translates into sustainable earnings growth.
I think all these developments have contributed to a major reassessment of what the market is prepared to pay for WiseTech shares.
The days of investors automatically awarding the company an eye-watering earnings multiple appear to be over.
Why I still like the business
Despite everything that has happened, I think WiseTech still has an excellent underlying business.
Its CargoWise platform is deeply embedded in the operations of major logistics companies, helping them manage shipments, customs requirements, documentation, and other complex processes.
Replacing that technology would be a significant undertaking for many customers, particularly those operating across multiple countries.
That gives WiseTech a strong position from which to keep growing.
The acquisition of e2open also broadens its reach beyond freight forwarders into other parts of global supply chains.
If management can successfully integrate the two businesses, I think there is considerable scope to improve efficiency and offer customers more services.
AI could provide another growth opportunity. WiseTech is developing tools to automate more of the work its customers perform, potentially increasing the value of CargoWise as logistics operations become more digital.
The challenge is demonstrating that these changes can produce the sustained earnings growth investors once took for granted.
Could WiseTech shares reach $50?
Consensus forecasts point to earnings per share (EPS) of $1.44 in FY27, increasing to $1.91 in FY28 and $2.31 in FY29.
That represents expected earnings growth of more than 60% between FY27 and FY29.
At the current share price of $32.09, WiseTech shares are trading on a P/E ratio of around 22 times FY27 earnings, falling to approximately 17 times FY28 earnings and just 14 times FY29 earnings.
I think those multiples will prove to be cheap if the company can deliver anything close to the expected growth.
So what would $50 require?
Based on FY27 forecasts, it would put WiseTech on a P/E ratio of almost 35 times. That would be a fairly demanding valuation given everything investors have experienced recently.
But looking further ahead changes the picture. At $50, WiseTech would trade on approximately 26 times FY28 earnings and less than 22 times FY29 earnings.
I think those are realistic multiples for a global software company capable of growing earnings at the rate analysts currently expect.
That makes $50 a plausible target in 2027 or 2028, particularly if investors become more confident that earnings growth can continue into the 2030s.
Foolish takeaway
I think WiseTech shares could return to $50 over the next couple of years.
The company has plenty of work ahead to rebuild confidence. But if management can deliver on growth expectations and demonstrate there is plenty more to come beyond FY29, I think $50 is a realistic target without needing the market to return to its old valuation extremes.
