Wisetech shares show signs of recovery from Jan's tech selloff: 40% boost to FY22 guidance

After witnessing around -30% of its stock value wiped out amid a local technology market selloff over the new year, Wisetech Global Ltd (ASX:WTC) is starting to allay investor jitters following the release of solid first-half FY22 results, including management guidance up to a 40% boost in FY22 earnings before interest and tax.

The logistics software group sold its Cargowise software to two new global freight handlers late in 2021 - Fedex and Access World - and the company now claims that 10 of the top 25 global freight companies have now either bought, or are in the process of rolling out, the software platform.

Move away from in-house solutions

Wisetech founder and CEO, Richard White, said these new business successes reveal a continuation of the trend for logistics companies to move away from in-house software solutions, and are driven by capacity constraints, port congestion and labour shortages.

“Constrained capacity and congestion mean that logistics providers are investing in accelerating their digital transformations, they are increasingly replacing in-house legacy systems with integrated global software that delivers efficiencies,” he said.

The work-from-home trend over the past few years has also helped, since global platforms such as Cargowise can be used from anywhere, whereas in-house systems may not be able to.

Results beat expectations

First-half FY22 revenue was $281m, up 18% against the first half of FY21. Costs rose 9%, to $38.4m, and statutory net profit after tax (NPAT) was $77.4m, up 74% on the prior period.

The company also declared a fully-franked interim dividend of 4.75 cents per share, up 76% on the first half FY21 dividend.

Market reaction seems positive

White’s sales pitch seems to have found at least some traction among investors.

Analysts at Morgan Stanley this month upgraded their target price on the group to $50, from $35, citing Wisetech’s search for large, strategic acquisitions as among the reasons.

Ord Minnett similar raised its own target price by $1, to $51, saying earnings momentum should continue into the second half of FY22 due to new contracts and cross-selling to existing customers.

There are signs that Wisetech's share price is recovering lost ground.