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On Monday, Mizuho (NYSE:MFG) Securities adjusted its outlook on WEX Inc. (NYSE:WEX), a prominent player in the Fleet Management sector, by reducing its price target to $170.00 from $215.00. The target sits within the current analyst range of $140 to $208, with WEX trading at $152.08. Despite the downward revision, the firm continues to endorse the stock with an Outperform rating.
WEX shares experienced a significant drop of 19% on Sunday, contrasting with a slightly positive movement in the S&P 500 Index. The price target adjustment follows a period of recalibrated long-term growth expectations for the company, particularly in its Corporate Payments & Benefits segment.
Analysts at Mizuho believe in WEX’s enduring position as a market leader, citing its robust moat facilitated by a closed-loop network, which has made it the preferred solution for U.S. truck drivers. The company maintains strong fundamentals with a 72% gross profit margin and $2.6 billion in revenue. Additionally, concerns that affected the market in the third quarter appear to have subsided, with the macroeconomic environment showing signs of improvement.
The firm also recognizes new revenue opportunities WEX is exploring, such as offering more flexibility in funding accounts, which could potentially bolster the company’s financial performance going forward.
Despite the lowered growth rate projections that have necessitated a decrease in estimates, Mizuho’s stance on WEX remains positive. The Outperform rating is maintained as the analysts see value in the company’s strategic positioning and potential for innovation in its service offerings. The new price target of $170 reflects a reassessment of WEX’s future earnings capacity in light of recent developments.
In other recent news, WEX Inc. has seen a series of adjustments from financial analysts following its fourth-quarter results for 2024. Keefe, Bruyette & Woods reduced their price target for WEX from $220 to $200, while maintaining an Outperform rating. The firm’s new earnings per share (EPS) estimates for 2025 and 2026 stand at $15.00 and $16.50, respectively. Meanwhile, William Blair downgraded WEX from Outperform to Market Perform, expressing concerns about the company’s competitive edge and capital allocation strategies.
Raymond (NSE:RYMD) James maintained its Market Perform rating for WEX, despite anticipating a considerable drop in future estimates due to the firm’s forecast for 2025. BofA Securities also adjusted its stance on WEX, downgrading the stock from Buy to Neutral and reducing the price target to $164.
These recent developments come after WEX reported fourth-quarter earnings that fell short of analyst expectations, with adjusted earnings per share of $3.57 and revenue declining 4% YoY to $637 million. The company’s outlook for the first quarter of 2025 and full year also failed to meet Wall Street projections. Despite these adjustments, WEX management plans to accelerate investment throughout 2025, aiming to enhance revenue growth and lay a foundation for improved performance in 2026.
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