WiseTech shares soar on Richard White transition
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More news: WiseTech shares rocketed at market open on the ASX after the technology company announced that its CEO Richard White will stand down with immediate effect, before transitioning into a new consulting role.
WiseTech, the largest technology stock on the ASX, was the best performing company across the ASX 200 by 10:45am AEDT.
Its share price gained 15.7% to $115 having shed 5.75% on Thursday.
Citi upgrades WiseTech to 'buy' as Morningstar drops fair value
The news: Citi analysts have upgraded WiseTech to ‘buy’ while Morningstar analysts have downgraded their fair value on the stock following its chief executive Richard White stepping down.
The numbers: The analysts were mixed on White’s role change as they believed his role change was a positive for shareholders but lowered their price targets.
Morningstar:
- Further lowered its fair value by 4% to $105, after downgrading its estimate by 5% prior to White’s departure from the role;
- The estimate implies a price to earnings ratio of 94 for FY25;
- Revenue looks to grow at a compound annual growth rate of 21%, driven primarily by organic revenue growth in the CargoWise product suite;
- Forecast an increase in group EBIT margins to 46% by fiscal 2034 from 37% in fiscal 2024, as a result of lower research and development spending as a share of revenue.
Citi:
- Despite the new rating upgrade to ‘buy’, the analysts downgraded its price target 10% to $124.50 as Citi moderates its long-term growth forecasts.
WiseTech’s share price last closed at $99.37 and since media reports surfaced about White’s alleged inappropriate behaviour, the share price has plummeted 19.1%.
The context: Citi analysts said they saw increased uncertainty with the leadership transition and believed some investors might see lingering corporate governance issues.
What they said: “We do think the board and Richard White have come to a solution whereby governance and strategy have been effectively separated,” Citi said.
“While we see potential for the share price to react negatively to the transition, we do not think the near-term earnings outlook will be impacted by the change and also see industry freight volumes as a tailwind for FY25e growth.”
Morningstar analyst Roy Van Keulen said: “Although we consider the new role to be a demotion and a strong signal from the board, we expect White will be able to continue driving the CargoWise product vision and strategy.
“... Given our assessment of WiseTech as a product-led company, we consider White’s continued involvement in this area of the business to be a positive outcome for shareholders.”
The sources: Citi research, Morningstar research
