WEX Analyst Highlights Cost Savings and Cross-Selling Revenue Potential Post Q3

By Judy J. Beasley Last updated Nov 1, 2022

Swiss credit analyst Nik Cremo reiterated Neutral on WEX inc. (NYSE: WEX) with a price target of $195.
WEX’s third-quarter 2022 revenue beat consensus estimates by 5%, driven by higher fuel prices, deposit revenue and higher-than-expected late fees. Meanwhile, Q3 Adjusted EPS beat consensus with a weaker margin of +2% due to higher than expected credit losses attributable to smaller OTR fleets and fraud losses that remained high at ~11 basis points.
Cremo highlighted WEX’s plans to achieve $100 million in operating expense savings by the end of 2024 (but expects to reinvest around 50%) and mentioned the potential to exit 2023 at a higher rate. operating costs of approximately $50 to $65 million.
He pointed to the disclosure of approximately $28 million in third-quarter corporate payment cross-selling revenue to WEX’s largest OTR (Fleet) customers and that the company is now working on a list of qualified prospects.
He noted that WEX launched Flume on schedule in Q3, its direct SMB solution to help businesses pay and get paid, and began cross-selling the product to its >450,000 SMB fuel customers.
Barclays Analyst Ramsey El-Assal kept WEX overweight and raised the price target from $211 to $213.
Price action: WEX shares traded up 1.14% at $164.67 when last checked on Monday.