Shareholders might have noticed that WEX Inc. (NYSE:WEX) filed its first-quarter result this time last week. The early response was not positive, with shares down 6.0% to US$217 in the past week. It looks like a pretty bad result, all things considered. Although revenues of US$653m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 24% to hit US$1.55 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Taking into account the latest results, the current consensus from WEX's 14 analysts is for revenues of US$2.75b in 2024. This would reflect a satisfactory 6.1% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 49% to US$9.41. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.74b and earnings per share (EPS) of US$10.23 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$254, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values WEX at US$285 per share, while the most bearish prices it at US$220. This is a very narrow spread of estimates, implying either that WEX is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the WEX's past performance and to peers in the same industry. It's pretty clear that there is an expectation that WEX's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.2% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.2% annually. So it's pretty clear that, while WEX's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for WEX. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for WEX going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for WEX you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.