On Wednesday, Evercore ISI increased the price target for Wix.com Ltd. (NASDAQ:WIX) to $180 from the previous target of $140, while reaffirming an Outperform rating on the stock. The firm's decision follows Wix.com's fourth-quarter earnings, which surpassed expectations with a record high free cash flow (FCF) margin and solid revenue figures.
Wix.com, known for its web development services, reported quarterly revenue that slightly exceeded analyst predictions, although bookings fell short, affected by a four-point change in B2B bookings recognition. However, the company's free cash flow was notably higher than anticipated, achieving a record 22% FCF margin excluding one-time items.
The company demonstrated significant financial achievements, including the highest gross margin since the second quarter of 2020, its second consecutive quarter of positive GAAP operating profit, and a record high FCF margin. Wix.com also provided guidance for fiscal year 2024, indicating further margin expansion and a substantial increase in free cash flow.
Evercore ISI highlighted Wix.com's expectation for revenue growth acceleration by 2025, with financials projected to substantially exceed the 'Rule of 40', which is the sum of revenue growth and FCF margin. The firm's model anticipates a 13% revenue growth and a 27% FCF margin for Wix.com in fiscal year 2025. The analysis suggests that Wix.com is a fundamentally strengthening asset with the potential for both top-line acceleration and improved profitability, supported by new product cycles and a business model that is relatively resilient to macroeconomic changes.
At the current valuation, Wix.com shares are trading at 14 times Evercore ISI's estimated 2025 free cash flow, which the firm believes provides a solid valuation support for the stock at its current level. Additionally, Evercore ISI announced it will host Wix.com for a non-deal roadshow (NDR) in San Francisco on March 6th, providing an opportunity for further engagement with the company.
The firm also noted that it is removing its Tactical Outperform rating on Wix.com, with the stock having risen approximately 45% since its third-quarter earnings report on November 9th.
InvestingPro Insights
As Wix.com Ltd. (NASDAQ:WIX) continues to make headlines with its financial performance and Evercore ISI's price target increase, investors are closely monitoring the company's trajectory. According to recent data from InvestingPro, Wix.com boasts a market capitalization of $7.81 billion, which underscores its significant presence in the web development industry. The company's revenue for the last twelve months as of Q3 2023 stood at $1.51 billion, marking a growth of 10.75%, which aligns with the positive narrative surrounding Wix.com's financial health.
InvestingPro Tips reveal that Wix.com has been an active player in the market through its aggressive share buyback strategy, which is often a sign of management's confidence in the company's future. Additionally, the company has been trading near its 52-week high, reflecting a strong market sentiment. With analysts predicting profitability this year, these insights may provide additional context for investors considering Wix.com's stock. It's worth noting that while the company does not pay a dividend, its high shareholder yield is a factor that may attract certain investors.
For those looking to delve deeper into the company's performance and future outlook, InvestingPro offers a range of additional tips, including 11 more for Wix.com. To access these insights and more, visit https://www.investing.com/pro/WIX and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.