WiseTech growth remains on track, buy rating reiterated: UBS

WiseTech (ASX: WTC) shares were pummeled on Wednesday, down -6.66% after a seemingly positive annual general meeting that reaffirmed the company's FY23 guidance.

Management reiterated guidance of 20-23% revenue growth for FY23 to $755-780m and 21-30% earnings growth to $385-415m.

"Our unique CargoWise offering is enabling us to drive momentum in our market penetration, with new global rollouts and ongoing revenue growth from existing customers adding to our strong momentum," said CEO Richard White.

UBS: Reiterate Buy

UBS reaffirmed a Buy rating for WiseTech and kept its target price unchanged at $65.90.

"We remain confident around our medium term growth outlook for WiseTech," the analysts said, highlighting factors including:

1. CargoWise business forecast to have a compound average growth rate of 33% across FY23-25, driven by "continued customer rollouts, new contract wins, customer takeup of new capabilities and price increases."

2. Growth from new products and capabilities, notably in customs clearance and electronic bill of lading

3. Ongoing cost efficiencies, with the most recent organisation-wide efficiency program delivering $32.6m in net cost reductions for FY22

AI and machine learning debut

UBS takes note of WiseTech's two recent acquisitions in the AI and digitisation software space for shipping and logistics.

In July, the company acquired Bolero, a cloud-based platform for carriers and logistics customers to trade services from multiple parties. And in early November, WiseTech acquired Shipamax, an AI-powered data entry software that converts PDFs, scans and images into machine-readable formats to automate manual tasks such as customs brokerage and invoicing.

UBS views digital documentation as a 'white-space opportunity' worth anywhere between $2-4bn.

Digitisation remains resilient

"Despite macro uncertainties, larger freight forwarders (e.g. DSV) remain committed to productivity improvements through better technology infrastructure," said UBS analysts.

"Our European Transport analyst recently hosted a fireside chat with DSV's Chief Operating Officer. They noted that moving freight currently involves 200 flows in the database with many of these flows still analog today."

WiseTech share price chart