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WYY Stock Slips 44% in a Month: Should Investors Buy the Dip or Wait?
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Key Takeaways
WYY dropped 43.5% in a month after missing Q1 estimates and posting a $2.7M accounting adjustment.
Delayed customer payments cut cash to $3.7M, raising short-term liquidity concerns for WidePoint.
WidePoint secured 3 task orders under the $2.7B Spiral 4 contract, with more expected in H2 2025.
Shares of WidePoint Corporation (WYY - Free Report) have declined 43.5% over the past month compared against the Zacks Computer - Services industry’s rise of 0.6%. The stock has underperformed the Zacks Computer and Technology sector’s and the S&P 500’s growth of 4.9% and 2.5%, respectively.
The sharp pullback follows the company’s weaker-than-expected first-quarter 2025 results and a one-time accounting adjustment that clouded its near-term performance. Although management clarified that the adjustment was non-cash and not reflective of operational performance, the timing of the news amid a fragile macro environment intensified the selloff.
WYY's One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, WidePoint stock is currently trading below its 50-day moving average, signaling a bearish trend.
WYY Stock Trades Below 50-Day Moving Average
Image Source: Zacks Investment Research
With the company trading 47.1% below its 52-week high of $6.25, investors are left wondering: Is this a buying opportunity or a red flag?
Let’s take a closer look at what’s driving the stock’s recent slide and whether it still deserves a place in your portfolio.
What Triggered the Decline?
WidePoint’s first quarter earnings fell short on both the top and bottom lines. The company reported a loss of 8 cents per share, missing the Zacks consensus estimates of a loss of 1 cent. Revenues came in at $34.2 million, falling short of the consensus mark by approximately $5 million.
The major culprit was a $2.7 million out-of-period accounting adjustment related to reselling contracts. While the net impact on gross profit was minimal, the adjustment negatively affected reported revenues, causing confusion around growth trends and weighing on investor sentiment.
Compounding the issue is a drop in cash reserves to $3.7 million, driven partly by delayed payments from a major customer. While the company still maintains access to a $4 million credit facility and expects resolution over the coming quarters, the short-term liquidity concern has been an overhang on the stock.
Estimates for WidePoint’s 2025 earnings per share have been revised downward, widening from a loss of 12 cents to a loss of 14 cents over the past 60 days. This downward trend reflects weakening analyst confidence in the stock’s near-term prospects.
WYY Earnings Estimate Trend
Image Source: Zacks Investment Research
Conversely, earnings estimate revisions for industry players like CGI Inc. (GIB - Free Report) , CACI International Inc. (CACI - Free Report) and Cass Information Systems, Inc. (CASS - Free Report) have increased 6%, 1% and 2.7%, respectively, in the past 60 days.
Can WidePoint Turn Things Around?
Despite the first quarter earnings hiccup, WidePoint continues to execute on several key strategic fronts. One of the most significant developments was the company’s achievement of FedRAMP authorization for its Intelligent Technology Management System (ITMS). This certification strengthens its positioning with federal agencies by validating the platform’s security and compliance, a crucial differentiator in government contracting.
Momentum is also building under the massive $2.7 billion Spiral 4 contract. So far, WidePoint has secured three task orders under this vehicle. With many Spiral 3 task orders set to expire, management expects increased activity under Spiral 4 in the second half of the year.
Beyond federal contracts, WidePoint is also investing in commercial growth opportunities. Its Device-as-a-Service (DaaS) offering continues to gain traction, supported by the opening of a dedicated facility and the hiring of new personnel.
Early-stage engagements in smart city initiatives and an emerging partnership with a satellite firm reflect a push to diversify its revenue base. While these projects are in the early stages, the company is optimistic and anticipates them to be a driving factor for its long-term growth strategy.
Valuation Insights for WYY Stock
WYY stock is currently trading at a discount. WYY is currently trading at a forward 12-month price-to-sales (P/S) multiple of 0.19X, well below the industry average of 1.82X, reflecting an attractive investment opportunity. Then again, other industry players, such as CGI, CACI International and Cass Information, have P/S ratios of 2.10X, 1.05X and 2.86X, respectively.
Image Source: Zacks Investment Research
Analysts’ Expectations on WidePoint Stock
Analysts remain highly bullish on WidePoint’s stock despite recent price weakness. Based on short-term price targets from two analysts, the average price target for WYY stands at $7.50, implying a robust potential upside of 126.6% from the last closing price of $3.31. Price projections range from a low of $7.00, still suggesting a strong upside of 111.5%, to a high of $8.00, suggesting a potential gain of 141.7%.
In terms of sentiment, WidePoint maintains a perfect average brokerage recommendation (ABR) of 1.00 on a scale of 1 (Strong Buy) to 5 (Strong Sell), indicating a unanimously bullish stance. The ABR is based on recommendations from two brokerage firms, both of which currently rate the stock as a Strong Buy. This is consistent with sentiment from previous months, as Strong Buy ratings have remained steady over the past quarter, underscoring confidence in WidePoint’s long-term potential.
WYY Stock Investment Strategy
While WidePoint’s strategic progress — marked by FedRAMP authorization, early Spiral 4 task orders, and promising prospects in the DHS CWMS recompete — signals potential for long-term growth, near-term headwinds continue to cloud the investment case. The recent earnings miss, accounting adjustment, declining cash reserves, and downward EPS revisions highlight the company’s executional risks.
Investors are advised to monitor WidePoint’s ability to convert pipeline opportunities into revenue, restore confidence around earnings visibility, and improve its liquidity position. Despite its discounted valuation and bullish analyst targets, we recommend waiting for a more stable operational backdrop before initiating new positions. For existing shareholders, holding this Zacks Rank #3 (Hold) stock may be prudent, especially given the company’s alignment with long-term federal IT demand and expanding commercial initiatives. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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WYY Stock Slips 44% in a Month: Should Investors Buy the Dip or Wait?
Key Takeaways
Shares of WidePoint Corporation (WYY - Free Report) have declined 43.5% over the past month compared against the Zacks Computer - Services industry’s rise of 0.6%. The stock has underperformed the Zacks Computer and Technology sector’s and the S&P 500’s growth of 4.9% and 2.5%, respectively.
The sharp pullback follows the company’s weaker-than-expected first-quarter 2025 results and a one-time accounting adjustment that clouded its near-term performance. Although management clarified that the adjustment was non-cash and not reflective of operational performance, the timing of the news amid a fragile macro environment intensified the selloff.
WYY's One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, WidePoint stock is currently trading below its 50-day moving average, signaling a bearish trend.
WYY Stock Trades Below 50-Day Moving Average
Image Source: Zacks Investment Research
With the company trading 47.1% below its 52-week high of $6.25, investors are left wondering: Is this a buying opportunity or a red flag?
Let’s take a closer look at what’s driving the stock’s recent slide and whether it still deserves a place in your portfolio.
What Triggered the Decline?
WidePoint’s first quarter earnings fell short on both the top and bottom lines. The company reported a loss of 8 cents per share, missing the Zacks consensus estimates of a loss of 1 cent. Revenues came in at $34.2 million, falling short of the consensus mark by approximately $5 million.
The major culprit was a $2.7 million out-of-period accounting adjustment related to reselling contracts. While the net impact on gross profit was minimal, the adjustment negatively affected reported revenues, causing confusion around growth trends and weighing on investor sentiment.
Compounding the issue is a drop in cash reserves to $3.7 million, driven partly by delayed payments from a major customer. While the company still maintains access to a $4 million credit facility and expects resolution over the coming quarters, the short-term liquidity concern has been an overhang on the stock.
WYY’s Earnings Estimate Revision Shows Downward Trend
Estimates for WidePoint’s 2025 earnings per share have been revised downward, widening from a loss of 12 cents to a loss of 14 cents over the past 60 days. This downward trend reflects weakening analyst confidence in the stock’s near-term prospects.
WYY Earnings Estimate Trend
Image Source: Zacks Investment Research
Conversely, earnings estimate revisions for industry players like CGI Inc. (GIB - Free Report) , CACI International Inc. (CACI - Free Report) and Cass Information Systems, Inc. (CASS - Free Report) have increased 6%, 1% and 2.7%, respectively, in the past 60 days.
Can WidePoint Turn Things Around?
Despite the first quarter earnings hiccup, WidePoint continues to execute on several key strategic fronts. One of the most significant developments was the company’s achievement of FedRAMP authorization for its Intelligent Technology Management System (ITMS). This certification strengthens its positioning with federal agencies by validating the platform’s security and compliance, a crucial differentiator in government contracting.
Momentum is also building under the massive $2.7 billion Spiral 4 contract. So far, WidePoint has secured three task orders under this vehicle. With many Spiral 3 task orders set to expire, management expects increased activity under Spiral 4 in the second half of the year.
Beyond federal contracts, WidePoint is also investing in commercial growth opportunities. Its Device-as-a-Service (DaaS) offering continues to gain traction, supported by the opening of a dedicated facility and the hiring of new personnel.
Early-stage engagements in smart city initiatives and an emerging partnership with a satellite firm reflect a push to diversify its revenue base. While these projects are in the early stages, the company is optimistic and anticipates them to be a driving factor for its long-term growth strategy.
Valuation Insights for WYY Stock
WYY stock is currently trading at a discount. WYY is currently trading at a forward 12-month price-to-sales (P/S) multiple of 0.19X, well below the industry average of 1.82X, reflecting an attractive investment opportunity. Then again, other industry players, such as CGI, CACI International and Cass Information, have P/S ratios of 2.10X, 1.05X and 2.86X, respectively.
Image Source: Zacks Investment Research
Analysts’ Expectations on WidePoint Stock
Analysts remain highly bullish on WidePoint’s stock despite recent price weakness. Based on short-term price targets from two analysts, the average price target for WYY stands at $7.50, implying a robust potential upside of 126.6% from the last closing price of $3.31. Price projections range from a low of $7.00, still suggesting a strong upside of 111.5%, to a high of $8.00, suggesting a potential gain of 141.7%.
In terms of sentiment, WidePoint maintains a perfect average brokerage recommendation (ABR) of 1.00 on a scale of 1 (Strong Buy) to 5 (Strong Sell), indicating a unanimously bullish stance. The ABR is based on recommendations from two brokerage firms, both of which currently rate the stock as a Strong Buy. This is consistent with sentiment from previous months, as Strong Buy ratings have remained steady over the past quarter, underscoring confidence in WidePoint’s long-term potential.
WYY Stock Investment Strategy
While WidePoint’s strategic progress — marked by FedRAMP authorization, early Spiral 4 task orders, and promising prospects in the DHS CWMS recompete — signals potential for long-term growth, near-term headwinds continue to cloud the investment case. The recent earnings miss, accounting adjustment, declining cash reserves, and downward EPS revisions highlight the company’s executional risks.
Investors are advised to monitor WidePoint’s ability to convert pipeline opportunities into revenue, restore confidence around earnings visibility, and improve its liquidity position. Despite its discounted valuation and bullish analyst targets, we recommend waiting for a more stable operational backdrop before initiating new positions. For existing shareholders, holding this Zacks Rank #3 (Hold) stock may be prudent, especially given the company’s alignment with long-term federal IT demand and expanding commercial initiatives. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.