WiseTech shares gain as Morningstar fears on 'key man risk' reduced
Make us a preferred source
Make us a preferred source on Google
The news: Shares in WiseTech Global extended gains on the ASX as Morningstar said its fears around "key man risk" were lowered at the software group's investor day on Tuesday.
The numbers: WiseTech shares were up 3.05% to $133.53 by 2:30pm AEDT, having nearly doubled in value over the last 12 months. The IT sector was the best performing, up 1.54%, while the wider ASX 200 gained 0.2%
Morningstar left its forecasts and $105 fair value estimate unchanged, continuing to assume an annual growth rate of 21% over the next decade.
The investment house cut its fair value estimate by 5%, then by a further 4%, in October following allegations of inappropriate behaviour by founder and former chief executive Richard White.
The context: Morningstar analyst Roy Van Keulen said that WiseTech's investor day was meant to provide investors with an overview of the company's many business opportunities and progress. However, assurances around key man risk "loomed larger" following the departure of White as CEO, he said.
Van Keulen noted that the investor day consequently focused less on new products and more on the company's governance, employees and culture. The presentations had the desired effect, he said, lowering — but not removing — Morningstar's fears around key man risk.
WiseTech's investor day showing also saw Goldman Sachs reiterate its 'buy' rating on the stock on Thursday.
What they said: "At WiseTech’s 2024 investor day, the strength of the company’s culture stood out to us, even though we already regarded it as leading within our Australian technology coverage," Van Keulen said.
"In our view, a strong culture can be a competitive differentiator as it can help fully harness employees’ individual capabilities and their collective expression through teamwork. This stands in stark contrast to most companies, where generic platitudes around company values are uninspiring and uninstructive."
The source: Morningstar research
