Darspal S Mann
Long/short equity, growth at reasonable price, special situations, deep value

WageWorks: Rage For This Cloud Story About To Hit A Wall

WageWorks Inc. (NYSE:WAGE) stock, after going public in 2012, is trading close to all time high levels. The "bull side" thesis rests on regulation driven growth of Consumer Defined Benefits (CDB) solutions and WageWorks' Cloud based solutions, which are supposed to offer high scalability, operating leverage and high cash flows. Near term, roll out of Ceridian relationship, 1XA (OneExchange Active) healthcare exchange and modification of "Use it or lose it" carryover provisions are expected to help revenue growth.

Closer look at the fundamentals suggest that the premise is faltering at best and concerns around the growth or the company as a successful Cloud model are glaring, which may accentuate in the coming quarters. The stock may correct 30-40%

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