Morningstar remains bearish on the stock’s valuation. It has a price target that values WiseTech at less than $2.6 billion compared to its current market capitalisation of $8.37 billion. But the research firm it has no problem with the quality of the business itself.
“We’re still comfortable that this is a decent business that should deliver relatively high earnings growth,” he said.
WiseTech is aiming to become the operating system for the trillion dollar logistics industry with a cloud-based solution which ensures data gets entered once and shared everywhere on the system between different logistics providers.
TMS Capital portfolio manager Ben Clark also backed WiseTech and its management, lead by company founder Richard White, against the reports which allege the company has overstated revenue and earnings.
Mr Clark remains unconvinced by the J Capital arguments and its motivations.
If everything they say is real, you would have seen a lot more insider selling
TMS Capital portfolio manager Ben Clark
“You’ve just always got to keep in mind that the complete motivation of whoever disseminates the information is to get the share price down because that’s the only way they will make money,” said Mr Clark.
“My view would be that Richard White has delivered on and more everything he’s said. He has barely taken any money out of his personal holding in WiseTech shares, and that to us is a real sign of confidence,” he said.
TMS has owned WiseTech shares since 2016.
“If everything they say is real, you would have seen a lot more insider selling because there has been plenty of opportunities for the founders of this business to sell down their stakes. They have been incredibly reluctant to,” said Mr Clark.
Wisetech lodged a rebuttal on Friday to the first report saying it “rejects entirely the allegations of financial impropriety and irregularity contained in the document”.
The stock has dropped more than 20 per cent since last Thursday when the first report from J Capital was released.
J Capital was co-founded by former Labor candidate for the federal seat of Wentworth, Tim Murray.
Colin Kruger is a business reporter. He joined the Sydney Morning Herald in 1999 as its technology editor. Other roles have included the Herald’s deputy business editor and online business editor.
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