WiseTech Global Ltd (ASX: WTC) has rolled out a new commercial model in an effort to become the operating system for global logistics.
But recent channel checks have highlighted that transition to the new model has thrown up some operational hurdles.
In a recent note to investors, Macquarie Group Ltd (ASX: MQG) commented that with WiseTech's dominant position, key customers have expressed pricing concerns for years. But as the company rolls out its new commercial model, concerns about price increases have intensified.
Here's Macquarie's view on the stock.
"Ultimately, WTC has a strong, sustainable competitive advantage," the broker said in its note to investors.
"There is strong evidence to suggest self-building a platform is both capital intensive and extremely difficult for Freight Forwarders, with CH Robinson the most recent example of a failed attempt at doing so."
It also added that platforms are run concurrently for some time before a full transition, which helps to enable a smooth changeover to the new model.
Over the long term, Macquarie sees WiseTech's transition to its commercial model as "necessary" for the business to drive its product roadmap and expand its platform.
It also sees a "strong ability to execute".
The broker has revised its FY2025, FY2026, FY2027, and FY2028 earnings per share (EPS) by 3%, -13%, 13%, and -6% respectively.
But Macquarie is under research restriction until post FY 2025 and/or a closure of the E2Open (NYSE: ETWO) acquisition deal. Therefore, it is not able to reveal its price target or rating on the stock.
As of lunchtime today, WiseTech Global shares are trading 0.79% higher at $108.49.
The stock has enjoyed a price rally since April, increasing around 45% since April 4, following confirmation that it is in discussions to acquire the US-based supply-chain platform E2Open for an estimated $3.5 billion.
The recent increase has helped offset some of the losses made when the company's share price experienced a significant 31.1% drop in February. The decline followed a series of governance-related events.
The key catalyst was the resignation of four independent non-executive directors – Lisa Brock, Richard Dammery, Michael Malone, and Fiona Pak-Poy – who collectively determined it was in the best interest of the company to stand aside. They cited "intractable differences" in the board and differing views regarding founder Richard White's ongoing role within the company.
The resignations led to concerns about the company's leadership and future direction, prompting a sharp sell-off in its shares.
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