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On Wednesday, Mizuho (NYSE:MFG) Securities adjusted its price target for WEX Inc. (NYSE:WEX), a leading financial technology service provider. The firm’s analyst, Dan Dolev, reduced the target to $215 from the previous $220 while maintaining an Outperform rating on the company’s shares. Currently trading at $181.50, WEX’s analyst targets range from $170 to $220, with InvestingPro data showing the stock is currently undervalued according to its Fair Value model.
The revision follows a detailed review of WEX’s financial outlook for the fourth quarter of 2024, the first quarter of 2025, and the full year of 2025. Dolev’s analysis incorporated several factors, including a decline in U.S. fuel prices since the management’s guidance of $3.28 during the week of October 14th, which saw a low-single-digit percentage drop thereafter. InvestingPro subscribers can access 8 additional key insights about WEX, including important metrics about management’s share buyback strategy and earnings growth expectations.
Additionally, Dolev noted a potential larger headwind due to Booking (NASDAQ:BKNG).com’s migration to a new revenue model, which is expected to particularly affect the first half of 2025. This transition is anticipated to impact WEX’s revenue streams, with the Mobility segment’s revenue projections for the first quarter of 2025 being adjusted downward from $355 million to $341 million. Similarly, the forecast for the Corporate Payments segment has been revised from $134 million to $113 million.
Despite these adjustments, the total revenue projection for the first quarter of 2025 stands at $663 million, aligning closely with the consensus. With a solid financial health score rated as "GOOD" by InvestingPro, strong gross profit margins of 72.4%, and a favorable PEG ratio of 0.81, WEX shows fundamental strength. Dolev expressed continued optimism about WEX’s prospects, citing the company’s dominant position in the Mobility sector and its effective execution within Corporate Payments. The analyst reaffirmed the Outperform rating, signaling confidence in WEX’s ability to navigate the challenges within its Travel segment. For deeper insights, investors can access WEX’s comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, financial technology service provider WEX Inc. saw a change in stock ratings from several analyst firms. Citi analysts downgraded the company from Buy to Neutral, citing concerns over near-term growth catalysts and challenges across the company’s segments. Meanwhile, Keefe, Bruyette & Woods lowered the price target for WEX to $220 but maintained an Outperform rating, emphasizing the company’s potential for solid earnings per share growth. Mizuho Securities also reduced its price target for WEX, reaffirming an Outperform rating.
In terms of earnings and revenue, WEX reported a modest increase in its third-quarter revenue for 2024, reaching $665 million, a 2% year-over-year increase. The company also reported an adjusted net income per diluted share at $4.35, marking a 7% increase. However, due to market challenges, WEX revised its 2024 guidance, expecting Q4 revenue to be between $630 million and $640 million, with full-year revenue projected to range from $2.62 billion to $2.63 billion.
In the broader payment processing sector, Keefe, Bruyette & Woods expressed optimism about several companies ahead of their fourth-quarter earnings reports, including PayPal (NASDAQ:PYPL) and Adyen (AS:ADYEN), expected to meet or exceed consensus expectations for 2025. These are the recent developments for WEX Inc. and other payment processing companies.
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