Stock of the day: WiseTech Global

(AI video summary)

This video was created on 6 May 2025 for IG audiences by ausbiz.

ASX code: WTC

WiseTech's warning amid Macquarie conference

At the Macquarie conference, which has become something of a 'confession season' over a few days, WiseTech Global has flagged potential demand risks from trade tariffs. The company expects container volumes globally to be down around 1% this year, creating possible headwinds for its business.

In addition, WiseTech recently confirmed media speculation that it's in advanced talks to acquire E2open, a New York-listed supply chain software company. This strategic move could potentially strengthen WiseTech's position in the global logistics software market despite the challenging trade environment.

Market reaction and valuation considerations

The market's relatively muted response to WiseTech's warning isn't surprising given two key factors:

1. The company's share price has already declined significantly in recent months
2. WiseTech remains one of the prime growth stories on the Australia 200  from a long-term perspective.

This situation highlights a fundamental question for investors: what's your investment timeframe, how long are you willing to stay invested, and how confident are you in the company's forecasts and outlook? These considerations form the blueprint for investment decisions in the current market environment.

Execution risks and growth prospects

Investors should be aware of execution risks associated with the potential E2open acquisition. Additionally, there remains the possibility that the outlook could deteriorate further. The company is also working toward launching two very important new products, which always involves risk.

Despite these challenges, WiseTech is considered a 'quality, wonderful company' with strong fundamentals. However, there have been leadership changes, with the 70-year-old chief executive officer (CEO) remaining on board despite some personal issues. This raises questions about whether investors should pay the same valuation for WiseTech as they might have two years ago.

Investment considerations for traders

For existing shareholders, reducing exposure rather than exiting completely might be a prudent approach to managing risk, particularly if you believe the share price will move higher in the years to come. For those not currently invested, the recent weakness could present an entry opportunity, though it's important to carefully select your entry point based on your confidence level.

Overall, WiseTech Global is considered a solid 'hol'd'. New investors might consider a small initial position at current levels. With its long-term growth potential and strong market position, WiseTech remains an interesting prospect for those willing to weather the current market uncertainty and potential short-term volatility.

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