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On Thursday, Keefe, Bruyette & Woods maintained its Outperform rating on WEX Inc. (NYSE:WEX) with a steady price target of $200.00. WEX Inc. announced the preliminary results of its tender offer, which was fully executed, leading to the repurchase of approximately 4.9 million shares. This represents about 12.5% of the company’s shares outstanding as of February 24, 2025, at a purchase price of $154 per share, totaling around $750 million, excluding fees and expenses related to the tender offer.
The successful completion of the tender offer is seen as a demonstration of the management’s confidence in the future of WEX’s business. The repurchase is expected to have a favorable impact by potentially removing any overhang from shareholders seeking an exit. Additionally, Keefe, Bruyette & Woods estimates that the tender offer will provide roughly a 3% increase to their $15 earnings per share (EPS) estimate for the year 2025, assuming all other factors remain constant.
WEX’s guidance for 2025 had already incorporated an assumption of $400 million in share repurchases. To fund the tender offer, the company took on additional debt. With the tender offer now concluded, attention turns to WEX’s management and their ability to meet the forecasts they have outlined. InvestingPro data shows the company’s EPS forecast for FY2025 stands at $14.99, with a P/E ratio of 19.94x, suggesting potential value for investors at current levels.
The analyst from Keefe, Bruyette & Woods expressed a positive outlook on the tender offer’s results, stating, "We view the preliminary results as a positive in that the full tender offer amount was achieved and shows management’s confidence in WEX’s business prospects." The analyst also noted the potential for the tender offer to alleviate concerns among shareholders wanting to liquidate their shares.
As WEX moves forward, the company’s ability to execute its strategy and achieve its financial targets will be closely watched by investors and analysts alike. Keefe, Bruyette & Woods anticipates that WEX’s management will successfully deliver on their commitments, as indicated by the analyst’s optimism in their commentary.
In other recent news, WEX Inc. has been active with several financial maneuvers and announcements. The company has completed a substantial $750 million stock buyback through a tender offer, repurchasing approximately 4.87 million shares at $154 each. This repurchase replaces a previously authorized $400 million buyback plan. Concurrently, WEX issued $550 million in senior unsecured notes due 2033, with the proceeds intended to fund the tender offer and repay a portion of its senior secured credit facilities. Additionally, WEX amended its credit agreement, introducing a $450 million Incremental Term Loan B-3 Facility to support these financial activities.
Analyst firms have also adjusted their outlooks on WEX. BofA Securities raised its price target for WEX to $164 while maintaining a Neutral rating, reflecting the company’s recent financial strategies. On the other hand, Mizuho (NYSE:MFG) Securities reduced its price target from $215 to $170 but continued to rate the stock as Outperform. This adjustment comes amid recalibrated long-term growth expectations, particularly in the Corporate Payments & Benefits segment. Despite these changes, Mizuho acknowledges WEX’s strong market position and potential for revenue growth. These developments underscore WEX’s strategic focus on capital management and operational investment.
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