Wright Express shares drop on analyst downgrade

Shares of Wright Express Corp. tumbled today after an analyst downgraded the stock, warning that low fuel prices will hurt profits at the payment processor for commercial and government vehicle fleets.

Analyst Tien-tsin Huang of JPMorgan lowered his rating on Wright Express's stock to "neutral" from "overweight."

Huang wrote in an investor note that South Portland, Maine-based Wright Express has executed its business strategy well, landing a recent government contract and cutting costs.

But Huang said lower fuel prices will hurt the bottom line at a company that helps clients limit gasoline costs and other expenses of managing vehicle fleets. Huang reduced earnings per share estimates for fiscal 2009 to $1.62 from an earlier forecast of $1.65, and to $1.64 for 2010 from the earlier forecast of $1.84.

"The lower EPS growth is primarily a function of a lower fuel price environment, which is out of (Wright Express') control, and, among the payment processors, unique to (Wright Express)," Huang wrote. "Without any conviction on the path of gas prices, we believe a discount is warranted."

Analysts surveyed by Thomson Reuters forecast Wright Express will post a fiscal 2009 profit of $1.76 per share, and a 2010 profit of $2.16 per share, on average.

Shares of Wright Express fell $1.79, or 13 percent, to $12.33 in morning trading, near the bottom of the stock's 52-week range of $8.21 to $34.75. (AP)