Mihir Bhatia, an analyst from Bank of America Securities, maintained the Hold rating on WEX (WEX – Research Report). The associated price target was lowered to $163.00.
Mihir Bhatia has given his Hold rating due to a combination of factors surrounding WEX’s current business environment and future outlook. Despite the company’s confidence in its underlying business fundamentals and its recent tender offer indicating belief in undervaluation, there are concerns that have led to a more cautious stance. The company’s revised long-term revenue growth guidance of 5-10% was met with surprise, as many investors were already expecting growth at the lower end of the previous range.
WEX’s growth prospects appear promising with expectations of organic revenue growth and EPS growth by 2025, but these are tempered by the challenges posed by the Booking.com situation in the travel segment. Additionally, while WEX is not currently seeing signs of a recession, its business segments are sensitive to economic conditions. The Mobility segment shows potential, especially in the less penetrated SMB area, yet the competitive environment and focus on deleveraging due to the recent tender offer present near-term challenges. These factors collectively contribute to the Hold rating, reflecting a balanced view of potential growth against existing risks.