WEX stock holds rating post Q4 results, Raymond James says

On Thursday, WEX Inc. (NYSE:WEX) maintained its Market Perform rating by Raymond (NSE:RYMD) James, following the release of its fourth-quarter financial results. The financial services company, with a market capitalization of $6.05 billion, reported earnings that aligned with analysts’ predictions for both revenue and adjusted earnings per share (EPS). InvestingPro data shows that 7 analysts have recently revised their earnings downward for the upcoming period. Despite this, the firm’s forecast for 2025 prompted analysts to anticipate a considerable drop in future estimates.

The revenue guidance for WEX was approximately 3% lower than the consensus of Wall Street analysts, while the adjusted EPS projection was 11% below the midpoint of expectations. This downward adjustment was largely attributed to challenges from Booking (NASDAQ:BKNG).com and broader macroeconomic factors, including foreign exchange and fuel prices, which are expected to create a nearly 10% drag on EPS growth for the year. According to InvestingPro, WEX maintains a solid financial health score of 2.79 (rated as GOOD), despite these headwinds.

Additionally, WEX has revised its long-term organic revenue growth target to a range of 5% to 10%, a decrease from the previous 8% to 12%. The company also updated its long-term adjusted EPS growth algorithm to 10% to 15%, down from the former 15% to 20%. According to Raymond James, these revised targets reflect necessary adjustments based on recent trends, and the firm believes that resetting expectations was a prudent move.

Despite a 19% drop in WEX’s stock price on Thursday, Raymond James views the current valuation—approximately 9 times the firm’s updated 2026 EPS estimate—as fair, considering the volatility observed in recent results. Trading at a P/E ratio of 18.98 and near its 52-week low, InvestingPro’s Fair Value analysis suggests the stock may be undervalued at current levels. The analysis indicates that while the short-term outlook for WEX may be challenged by external factors, the current market performance is deemed reasonable in light of the circumstances. For deeper insights into WEX’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

In other recent news, WEX Inc. has been the subject of significant attention in the financial sector. The company’s fourth-quarter earnings report and future guidance have not lived up to expectations, prompting BofA Securities to downgrade the stock from Buy to Neutral. WEX’s earnings per share fell short of the $3.61 analyst estimate at $3.57, and revenues also declined by 4% year over year to $637 million.

BofA Securities has also adjusted the price target for WEX to $164, a notable reduction from the previous $211. This decision follows WEX’s lowering of its long-term growth targets and earnings guidance for the upcoming year. The company now aims for 5-10% organic revenue growth, a decrease from the previous 8-12%, and adjusted EPS growth of 10-15%, down from the earlier target of 15-20% adjusted net income growth.

Andrew Jeffrey, an analyst from William Blair, expressed concerns about the company’s investments in its payment business. Despite the disappointing results, WEX remains optimistic, highlighting a 3% increase in the average number of vehicles serviced and a 2% growth in the average number of SaaS accounts in its Benefits segment. These are recent developments that investors should keep an eye on.

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