Employee Benefit Programs Boost WageWorks

08/29/2018 5:00 am EST


Todd Shaver

Founder and Editor-in-Chief, BullMarket.com

We have just seen WageWorks (WAGE) turn an important corner, recapturing the extreme 34% swoon it made early this year when it became clear that accounting glitches would keep it from filing its quarterly reports on time, notes Todd Shaver, editor of BullMarket.

The company administers employee benefit programs like Health Savings Accounts, Flexible Spending Accounts and Health Reimbursement Arrangements. With more and more businesses exploring these programs to save money via reduced payroll taxes and Obamacare requirements, WageWorks remains  a key player in the space.

While the stock remains volatile, that trajectory is proof that between the swings in sentiment, investor angst around this company has almost entirely worked itself out. Whenever the numbers come, they’ll be digested on their own merits and not with the shadow of the calendar hanging over them.

And in the meantime, we’re looking at a new company from an organizational point of view. The chief financial officer and chief counsel have resigned, and with a new CEO coming up from the president’s chair, there’s fresh blood to ensure that WageWorks gets back to work reclaiming the $80 territory it briefly held early last year.

The last quarterly SEC filing showed 7% earnings growth on healthy 30% higher revenue than what we saw in the previous year. As management keeps telling us, it’s only the past numbers that tripped auditor flags. Guidance for 2Q18 and beyond remains as robust as ever.

The stock was always a roller coaster and recent moves have tested even our patience. Nonetheless, there’s no reason to give up on the company now. We see $60 within sight once management finally catches up with its SEC filings and from there our $80 target beckons.

While it hasn’t been a smooth ride, that’s the nature of our Special Opportunities recommendations: catch an unloved stock early in its recovery, hang on through the relapses and make a lot of money.

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