WEX Rating Lowered to Underweight at JPMorgan Chase & Co. (WEX)

WEX (NYSE:WEX) was downgraded by investment analysts at JPMorgan Chase & Co. from a “neutral” rating to an “underweight” rating in a note issued to investors on Wednesday, StockRatingsNetwork.com reports. They currently have a $86.00 price objective on the stock, up from their previous price objective of $77.00. JPMorgan Chase & Co.’s target price indicates a potential downside of 2.81% from the company’s current price.

The analysts wrote, “We are downgrading WEX to Underweight from Neutral as we believe shares have gotten ahead of themselves as it appears investors are projecting FleetCor type EPS growth and positive earnings revisions (which have been largely fueled by acquisitions) onto WEX. While WEX and FleetCor both play in the fleet fuel card space, their stated growth objectives and strategies are different. WEX has taken an organic approach to growing its non-fleet businesses and is generally less acquisitive than FleetCor (FLT has earmarked ~$900M for acquisitions over the next three years), which has translated to considerably slower EPS growth over the past two years (WEX’s compounded EPS growth rate from 2011 to 2013 lags FLT’s by nearly 24 points). With WEX trading 18 times our FY14 estimates, a four-turn premium to its average next twelve month forward multiple since 2010, and facing tough fuel price and credit loss compares, soft underlying macro trends and headwinds created by the MasterCard/Visa interchange litigation settlement ($0.07 EPS drag in 2H13), we see limited share price appreciation. The primary risks to our Underweight rating are a sharp rise in gas prices and/or WEX completing a materially accretive acquisition (management highlighted several potential acquisitions in the pipeline on their 1Q13 earnings call). We may become more constructive on a pull-back.”

Several other analysts have also recently commented on the stock. Analysts at Keefe, Bruyette & Woods raised their price target on shares of WEX from $94.00 to $100.00 in a research note to investors on Thursday, August 8th. They now have an “outperform” rating on the stock. Separately, analysts at Compass Point raised their price target on shares of WEX from $70.00 to $80.00 in a research note to investors on Friday, August 2nd. They now have a “neutral” rating on the stock.

Shares of WEX (NYSE:WEX) opened at 88.49 on Wednesday. WEX has a 52 week low of $63.69 and a 52 week high of $91.84. The stock’s 50-day moving average is currently $83.8. The company has a market cap of $3.438 billion and a P/E ratio of 30.30.

WEX (NYSE:WEX) last announced its earnings results on Wednesday, July 31st. The company reported $1.05 earnings per share for the quarter, beating the analysts’ consensus estimate of $1.04 by $0.01. The company had revenue of $178.30 million for the quarter, compared to the consensus estimate of $176.74 million. Analysts expect that WEX will post $4.34 EPS for the current fiscal year.

WEX Inc, formerly Wright Express Corporation is a provider of corporate card payment solutions. The Company operates in two segments: Fleet Payment Solutions and Other Payment Solutions.

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