On Thursday, Cantor Fitzgerald began coverage on shares of Wix.com (NASDAQ:WIX), a leader in AI-enabled website building, with an Overweight rating and a price target of $200. The new rating reflects the firm's confidence in Wix.com's growth trajectory and its ability to outperform its competitors.
Wix.com's aggressive introduction of product improvements has been a key factor in increasing its user base and enabling the company to exert more control over pricing on its platform, particularly in the Self-create segment. Additionally, the Partner business is gaining recognition as a solid growth driver for the company in the medium term.
According to Cantor Fitzgerald, Wix.com has considerable potential to enhance its margins through fixed cost leverage and increased marketing efficiency. The firm is optimistic about Wix.com's fundamentals over the next 12 to 18 months.
Despite Wix.com shares rising by 35% year-to-date, outpacing the Nasdaq's 18% increase, Cantor Fitzgerald believes that the stock's risk/reward balance remains favorable at its current market price. The $200 price target assigned to Wix.com is based on a 20 times price-to-2025 estimated free cash flow multiple, equivalent to a 6% free cash flow yield.
In other recent news, Wix.com, a leading cloud-based development platform, has reported significant growth in its second quarter earnings and revenue, exceeding expectations. The company's Q2 bookings increased by 15% year-over-year, reaching $458 million, and revenue grew by 12% year-over-year, finishing above guidance at $436 million.
This strong financial performance led to analysts' upgrades and downgrades. Financial analysis firm Benchmark raised the price target for Wix.com to $225, maintaining a Buy rating, while investment firm Needham increased its stock price target from $190.00 to $200.00, also maintaining a Buy rating.
However, Piper Sandler downgraded Wix.com from Overweight to Neutral due to valuation concerns, and KeyBanc initiated coverage on the company with a Sector Weight rating. These recent developments come as Wix.com's free cash flow (FCF) forecasts for the years 2024 and 2025 have been increased, despite conservative estimates for the company's FCF margin. Moreover, Wix.com has completed a significant $225 million share buyback program, demonstrating its confidence in long-term growth prospects.
InvestingPro Insights
Adding to the analysis by Cantor Fitzgerald, real-time data from InvestingPro underscores the current financial landscape of Wix.com. With a market capitalization of $8.85 billion, Wix.com trades at a P/E ratio of 119.85, indicating a premium valuation that investors are willing to pay for its earnings potential. The company's revenue has grown by 12.85% over the last twelve months as of Q2 2024, showcasing its ability to expand its top line.
InvestingPro Tips highlight that management's confidence is reflected in their aggressive share buyback strategy. Additionally, the company is anticipated to see net income growth this year, with 8 analysts revising their earnings estimates upwards for the upcoming period. This aligns with Cantor Fitzgerald's positive outlook on the company's margin enhancement potential and market performance.
For investors seeking more comprehensive insights, there are additional InvestingPro Tips available, including analyses on Wix.com's valuation multiples and profitability forecasts. As of now, InvestingPro features 12 more tips that can provide investors with a deeper understanding of Wix.com's financial health and market position.
It's worth noting that the company is expected to be profitable within the year, which may be a key factor for potential investors. For more detailed analysis and future outlook, interested readers can explore the full suite of tips at InvestingPro's dedicated page for Wix.com (https://www.investing.com/pro/WIX).
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