‘White lightning’: WiseTech CEO drama not an issue for market watchers

In a report labelled “White lightning”, Macquarie analysts upgraded WiseTech Global to “outperform” and said that the product delays were akin to short-term noise.

“We use short-term weakness as an opportunity to enter long-term story,” the analysts wrote. “No evidence of misconduct has been found by the reviewing lawyers. This, coupled with the former CEO moving to a product consultant role, mitigates the risk of an overhang.”

Dammery said on Friday that a review led by law firms Herbert Smith Freehills and Seyfarth Shaw LLP into White’s conduct was ongoing but had so far not found any evidence of impropriety by White, including on issues relating to relationship disclosures or improper use of company funds.

The firms have interviewed 21 people in 31 interviews and were probing allegations that White failed to disclose personal relationships to the board and misused company funds.

“WiseTech Global has an unassailable competitive advantage driven by the CargoWise dataset and Container Transport Optimisation (CTO) is a whitespace opportunity with no competitors,” the Macquarie analysts wrote. “Penetrating this opportunity will take time.

“CargoWise is a high-quality platform with multiple catalysts, operating with a sustainable competitive advantage in a winner-takes-most market.”

Meanwhile, Citi analysts have kept a “buy” rating on WiseTech shares alongside a target price of $124.50 and said management depth will be a key focus at next week’s investor day on December 3. The analysts said the quantum of the revenue guidance downgrade was a surprise.

“With WiseTech noting that Richard White was distracted at a critical juncture of the development of Container Transport Optimisation’s development, we see management depth as taking even more importance going forward and expect it to be likely the key focus at WiseTech’s investor day on December 3,” they said.

WiseTech told investors last month that White would take a brief break before taking up a “full-time, long-term consulting role” where he will be paid the same annual salary – $1 million – that he received as chief executive.

Morgan Stanley analysts see a path to $200 a share for WiseTech global shares.

“The outlook remains very positive,” they wrote. “We see evidence of WiseTech Global’s software driving both higher profits and faster profits for its users.”

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“To be clear, we do think a period of higher volatility in the shares is likely now … after the management/board changes (ie until positions filled) … and a timing delay in a major new product launch. Importantly, whilst the board’s external review into the conduct of the former CEO is still ongoing, the results thus far, announced at the AGM, have not made any adverse findings.”

Morgans analysts have also upgraded their rating from “hold” to “add”.

“Following the pullback in WTC’s share price, we see the company trading at an increasingly attractive EV/EBITDA multiple and view its upcoming investor day as a potential catalyst for the stock,” they wrote. “We therefore upgrade to an ‘add’ rating.”

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