The WiseTech Global Ltd (ASX: WTC) share price is having a mildly positive day on Wednesday.
In afternoon trade, the logistics solutions technology company’s shares are up 1% to $43.28.
This modest gain by the WiseTech share price may be quite disappointing for shareholders given the company’s strong half year result and guidance upgrade.
What’s going on with the WiseTech share price?
It’s not often you get such a muted response to an earnings guidance upgrade, but that is what’s happening with the WiseTech share price today.
In case you missed it, this morning the company reported an 18% increase in revenue to $281 million and a 54% jump in EBITDA to $137.7 million. This strong result was driven by increased market penetration, customer usage, and adoption of its technology, as well a price change to CargoWise.
Recurring on-demand revenue grew 25.4% to $225 million and WiseTech’s CargoWise attrition rate was once again below 1%.
This ultimately led to management reaffirming its full year revenue growth guidance and upgrading its EBITDA guidance.
Based on market conditions not materially changing, WiseTech expects revenue growth of 18% to 25%. This will represent revenue of $600 million to $635 million.
As for its earnings, management has upgraded its EBITDA growth guidance to 33% to 43%, which represents EBITDA of $275 million to $295 million. This is up from its prior guidance of 26% to 38%, which implied EBITDA of $260 million to $285 million.
Why are its shares not rising more?
There are a couple of potential reasons for the subdued performance by the WiseTech share price.
One is the company’s track record of upgrading its guidance. Over the last few years, WiseTech has upgraded its guidance on a number of occasions. This may have led to the market already pricing in a guidance upgrade.
Another factor that could be weighing on the WiseTech share price is management’s outlook commentary. Although it is positive on the second half, its guidance came with a warning.
Management said: “Uncertainty around future economic and industrial production growth and/or global trade may lead to alternative outcomes. Prevailing uncertainties relating to sovereign and geopolitical risk may also reduce assumed growth rates.”
The post Great expectations: Why is the Wisetech (ASX:WTC) share price not gaining more today? appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended WiseTech Global. The Motley Fool Australia owns and has recommended WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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