WEX Analyst Highlights Cost Savings, Cross-Sell Revenue Potential Post Q3 Beat

Credit Suisse analyst Nik Cremo reiterated Neutral on WEX Inc WEX with a $195 price target.
WEX's Q3 2022 revenue exceeded consensus estimates by 5%, with help from higher fuel prices, deposit revenue, and higher-than-expected late fees. Meanwhile, Q3 adjusted EPS beat consensus by a smaller margin of +2% due to higher-than-expected credit losses attributable to smaller OTR fleets and fraud losses that remained elevated at ~11bps.
Cremo highlighted WEX's plans to deliver $100 million in run-rate operating expense savings by the end of 2024 (but plans to reinvest ~50%) and mentioned the potential to exit 2023 at a ~$50 million -$65 million run-rate.
He emphasized the disclosure of ~$28 million in Q3 run-rate Corporate Payments cross-sell revenue to WEX's larger OTR (Fleet) customers and that the company is now working through a qualified sales lead list.
He noted that WEX launched Flume on schedule in Q3, its SMB direct solution to help businesses pay and get paid, and has begun cross-selling the product to its >450,000 SMB fuel customers.
Barclays analyst Ramsey El-Assal maintained WEX with an Overweight and raised the price target from $211 to $213.
Price Action: WEX shares traded higher by 1.14% at $164.67 on the last check Monday.

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