On Monday, Keefe, Bruyette & Woods adjusted their outlook on shares of WEX Inc. (NYSE: NYSE:WEX), a leading financial technology service provider. The firm reduced the price target on WEX stock to $220 from the previous target of $247, while keeping an Outperform rating on the shares.
The revision comes as Keefe analysts recognize the challenges WEX faces in the near term, which they believe are mostly cyclical rather than structural in nature. Despite these headwinds, the analysts remain positive about the company's prospects, citing its potential for solid earnings per share (EPS) growth. InvestingPro data supports this view, revealing a healthy revenue growth of 6.06% and a P/E ratio of 22.27, which appears reasonable given the growth outlook.
The analysts noted that the fourth-quarter results and the outlook for 2025 are not expected to serve as significant catalysts for the stock's performance. They pointed to macroeconomic factors, such as fluctuating gas prices and foreign exchange rates, as current obstacles.
Moreover, the trucking volumes show signs of improvement but continue to reflect a year-over-year declining trend. For deeper insights into WEX's financial health and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports.
The firm sees share buybacks as a possible positive influence on future earnings estimates, a view supported by InvestingPro data showing management's aggressive share repurchase activity. The analysts believe that once the expectations for 2025 are recalibrated and management can focus on surpassing and elevating financial forecasts, there could be a more favorable trajectory for WEX stock.
The report concluded with a forward-looking perspective, suggesting that despite low market expectations for WEX, the analysts foresee an improvement in the stock's performance as the company navigates through its present challenges and resets its goals for the coming years.
In other recent news, WEX Inc. reported a slight rise in its third-quarter revenue for 2024, reaching $665 million, marking a 2% year-over-year increase.
Adjusted net income per diluted share saw a 7% increase, achieving $4.35. However, due to declining fuel prices and operational issues, WEX revised its 2024 guidance, anticipating Q4 revenue to be between $630 million and $640 million, and full-year revenue to range from $2.62 billion to $2.63 billion.
Mizuho (NYSE:MFG) Securities lowered the price target for WEX from $206 to $200, citing potential macroeconomic challenges signaled by a decrease in the number of gallons purchased per business day by local fleet customers.
Despite this, Mizuho reaffirmed an Outperform rating on the stock. On the other hand, Wolfe Research downgraded WEX from 'Outperform' to 'Peer Perform', due to concerns over the company's ability to accelerate revenue amid sector-specific headwinds.
In other recent developments, WEX's Mobility segment reported an 8% growth, and the company achieved $110 million in annual cost savings, half of which was reinvested in growth initiatives. Despite the challenges, WEX remains dedicated to its growth strategy, as evidenced by the expansion of its Corporate Payments segment with new customer relationships.
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