The stock fell 17.3% on Wednesday, prompting the ASX to issue a speeding ticket to the company asking for an explanation of why it had been sold down so heavily.
Macquarie sees this as an opportunity to buy into the stock, and has a bullish price target on the company's shares, although it's worth noting that UBS has a differing opinion.
The review into pricing is still under way, however could have large implications for what Pexa is able to charge of e-conveyancing services.
In its own words the company said in its statement to the ASX:
As part of its Pricing review process, yesterday IPART released a consultation Paper titled 'Methodology Paper – Initial Asset Base for an Electronic Lodgment Network Operator'. The Paper sets out a proposed approach to calculating an initial asset base and seeks submissions and feedback on the proposed and alternative methodologies prior to developing draft recommended prices for the Draft Report, which they expect to be published in June 2026. IPART's methodology paper contains information which does not constitute a decision, is open to change and contains illustrative examples which should not be read as guidance. There is no certainty at this point in time that the proposed approach will be used by IPART and, if the proposed approach is used to develop draft recommended prices, the numerical components remain uncertain and open to discussion. While the initial asset base is a key element in the 'building block' method IPART will use in their price recommendation, there are multiple other inputs including return of capital, return on capital, operational expenditure, tax adjustments and other adjustments as determined by IPART.
Pexa Group shares looking cheap?
The analyst team at Macquarie said it was difficult to discern IPART's outcome.
They ran the numbers using some assumptions however and said that even if price cuts of 5%-10% were implemented, there was sufficient cost-out opportunity within the business.
Macquarie maintained its price target of $19.60 on Pexa shares, compared with $12.97 currently. This would constitute a 51.1% return if achieved.
Conversely UBS has downgraded Pexa from a buy to neutral and lowered its price target for the shares from $17.50 to $15.70.
Pexa does not currently pay dividends.
Pexa Group was worth $2.28 billion at the close of trade on Wednesday.
The post After their big fall is it time to buy the dip on Pexa? appeared first on The Motley Fool Australia.
Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and PEXA Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and PEXA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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