On Thursday, RBC Capital Markets updated its outlook on Wix.com (NASDAQ:WIX) shares, a leading cloud-based web development platform, by raising the price target from $190.00 to $245.00, while reaffirming an Outperform rating. This adjustment comes after Wix.com's third-quarter performance, which showcased significant achievements in both bookings and free cash flow (FCF).
The company's results exceeded expectations, leading to an upward revision in forecasts. RBC Capital's assessment highlighted Wix.com's effective use of artificial intelligence (AI), which has not only been well-received but also shown tangible results. The AI-driven strategy is credited for better-than-expected outcomes from recent price increases, which in turn have provided the company with a clearer outlook for future growth.
Wix.com's AI initiatives have been particularly successful in driving user sign-ups and improving conversion rates. The company is not resting on its laurels; it plans to introduce more AI-based products across its subscription services in 2025. These products are expected to enhance the company's offerings and potentially boost its financial performance.
Furthermore, Wix.com's pursuit of efficiency is yielding results, as seen in the improved customer economics within its subscription segment. This improvement is a positive indicator for the company's operational leverage and overall financial health.
RBC Capital has expressed confidence in Wix.com's trajectory, citing the company's continued strong growth, potential for margin expansion, increasing free cash flow, and the likelihood of capital return to shareholders. The firm recommends maintaining ownership of Wix.com shares, anticipating sustained robust performance.
In other recent news, Wix.com has been the subject of several analyst upgrades following its robust third-quarter results. Citi raised its price target on Wix to $260, citing strong growth prospects, while Barclays (LON:BARC) lifted its target to $236, noting the company's solid performance and improving free cash flow margin. Meanwhile, Morgan Stanley (NYSE:MS) maintained an Equalweight rating, forecasting an optimistic outlook for fiscal year 2025.
Wix's third-quarter results surpassed analyst expectations, with an adjusted earnings per share of $1.50, exceeding the anticipated $1.44. Revenue also experienced a 13% year-over-year increase, reaching $444.7 million, slightly above the consensus of $443.97 million. The impressive performance was largely driven by a 16% YoY surge in bookings growth, attributable to the company's Studio product, AI innovations, and robust commerce activity.
These are recent developments that reflect the company's positive performance and forward-looking strategy. Wix.com's management team is refocusing efforts on the Self Creators segment to stimulate growth and is anticipating the release of new AI products expected to generate direct revenue. The company has also raised its full-year 2024 revenue guidance to a range of $1.757-$1.764 billion, up from the earlier forecast of $1.747-$1.761 billion.
InvestingPro Insights
Recent InvestingPro data aligns with RBC Capital's optimistic outlook on Wix.com (NASDAQ:WIX). The company's market capitalization stands at $11.77 billion, reflecting investor confidence in its growth potential. Wix's revenue for the last twelve months as of Q2 2024 reached $1.65 billion, with a solid revenue growth of 12.85% over the same period, underscoring the company's ability to expand its user base and monetize its services effectively.
InvestingPro Tips highlight several positive aspects of Wix's financial performance. Notably, management has been aggressively buying back shares, which often signals confidence in the company's future prospects. Additionally, net income is expected to grow this year, aligning with the company's improved customer economics and operational efficiency mentioned in the article.
The stock's recent performance has been particularly strong, with InvestingPro data showing a significant 21.92% return over the last month and an impressive 117.51% return over the past year. This upward momentum is consistent with RBC Capital's decision to raise the price target and maintain an Outperform rating.
For investors seeking a more comprehensive analysis, InvestingPro offers 17 additional tips on Wix.com, providing a deeper understanding of the company's financial health and market position.
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