On Wednesday, CFRA raised the price target for Wix.com (NASDAQ:WIX) shares, a leading cloud-based development platform, to $196 from $155 while maintaining a Buy rating on the stock.
This adjustment follows a strong performance in the first quarter of 2024, where Wix.com reported a 12% year-over-year increase in revenue, reaching $420 million.
The growth was attributed to a significant rise in the premium subscription base, particularly from the partners' business, adoption of higher-tiered packages, and improved uptake of business solutions products.
The company's business solutions segment saw a substantial increase of 20.4%, amounting to $115.5 billion, while the creative subscription segment grew by 9.4%, reaching $304.3 million.
The analyst from CFRA highlighted that Wix's revenue growth and cost efficiencies contributed to a rise in non-GAAP EPS, excluding non-recurring items, to $1.38, up from $0.91 in the same quarter of the previous year.
CFRA's projection of a continued upward trajectory for Wix.com is based on the company's commitment to product innovation and efforts to attract high-intent users.
These strategies are expected to result in a steady increase in the number of subscriptions and the average revenue per subscription. The firm maintains its non-GAAP EPS estimates for Wix.com at $5.76 for 2024 and $6.55 for 2025.
The price target of $196 is based on an implied 2024 price-to-sales (P/S) ratio of 6.3 times, which aligns with the peer mean.
Wix's projected revenue growth stands at 11.3%, slightly below the peer average of 11.5%. The CFRA analyst believes that Wix's higher operating leverage and disciplined cost management will support improvements in net margin.
InvestingPro Insights
As Wix.com (NASDAQ:WIX) continues to capture the market with its innovative cloud-based solutions, InvestingPro data and tips provide a deeper understanding of its financial health and stock performance. Wix's market capitalization stands at a robust $9.68 billion, reflecting investor confidence. The company's aggressive share buyback program, as highlighted in one of the InvestingPro Tips, underscores management's belief in the company's value. Furthermore, with a revenue growth of 13.18% over the last twelve months as of Q1 2024, Wix demonstrates its ability to expand its operations effectively.
While the P/E ratio is high at 146.79, indicating a premium valuation, another InvestingPro Tip suggests that net income is expected to grow this year, which may justify the current earnings multiple. Additionally, the significant return over the last week of 25.95% and a one-year price total return of 119.21% signal strong recent performance, which may interest momentum investors. It's worth noting that six analysts have revised their earnings upwards for the upcoming period, suggesting potential optimism around the company's future earnings potential.
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