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PORTLAND, Maine - WEX Inc. (NYSE: NYSE:WEX), a global commerce platform currently valued at $5.92 billion, announced its intention to repurchase up to $750 million of its common stock through a modified Dutch auction tender offer. The company’s shares, which are trading near their 52-week low of $146.03, are to be bought back at a price not less than $148 and not exceeding $170 per share. According to InvestingPro analysis, WEX appears undervalued at current levels, with the stock down over 33% in the past year.
The tender offer is expected to start on Wednesday, February 26, 2025, with a scheduled end one minute after 11:59 p.m., New York City Time, on Tuesday, March 25, 2025. Completion of the offer is contingent on certain conditions, including the successful procurement of at least $750 million in debt financing, which WEX anticipates using primarily to fund the buyback. InvestingPro data shows the company maintains a solid financial position with a current ratio of 1.02 and generated $334.1 million in levered free cash flow over the last twelve months.
In a modified Dutch auction, shareholders have the opportunity to tender their shares at a price within the specified range. WEX will then select the lowest price that allows for the repurchase of shares totaling $750 million or the maximum number of shares offered before the tender’s expiration, whichever is less. All shares accepted in the tender will be purchased at the same price, regardless of the initial tender price. Shares tendered at prices above the final purchase price will not be acquired.
WEX’s CEO, Melissa Smith, expressed the company’s confidence in its business prospects and reiterated its commitment to previously announced growth investments. She emphasized the tender offer as a reflection of the management and Board’s belief in WEX’s long-term value. This confidence is supported by the company’s strong fundamentals, with InvestingPro data showing a healthy gross profit margin of 72.44% and projected earnings per share of $14.66 for fiscal year 2025. Subscribers to InvestingPro can access 10 additional key insights about WEX, including detailed analysis of its financial health and growth prospects.
The tender offer has not yet been initiated, and there is no guarantee it will proceed as described or at all. WEX has made it clear that neither the company nor its Board will advise shareholders on whether to tender their shares or at what price. Shareholders will need to assess the tender offer documents, once available, and consult their financial and tax advisors before making any decisions.
This announcement is based on a press release statement and is provided solely for informational purposes. It is not an offer to purchase nor a solicitation of an offer to sell any securities. Relevant documents will be filed with the SEC upon commencement of the tender offer, and shareholders will be able to access them on the SEC’s website, WEX’s investor relations webpage, or from the tender offer’s information agent.
In other recent news, WEX Inc. reported its fourth-quarter earnings, aligning with analysts’ predictions for revenue and adjusted earnings per share (EPS). However, the company’s revenue guidance was approximately 3% lower than Wall Street expectations, and its adjusted EPS projection was 11% below the midpoint of forecasts. In response to these results, several analyst firms have adjusted their ratings and price targets for WEX. BofA Securities downgraded WEX from Buy to Neutral, significantly reducing the price target from $211 to $164, citing unique growth challenges and competitive pressures. Similarly, Mizuho (NYSE:MFG) Securities revised its price target for WEX to $170, maintaining an Outperform rating due to the company’s strategic positioning and potential for innovation. Keefe, Bruyette & Woods also lowered their price target to $200 while keeping an Outperform rating, noting WEX’s plans to accelerate investment to enhance revenue growth. On the other hand, William Blair downgraded WEX to Market Perform, expressing concerns over the company’s competitive edge and capital allocation strategies. Raymond (NSE:RYMD) James maintained a Market Perform rating, viewing WEX’s current valuation as fair given the recent volatility in results.
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