BofA reinstated Wix.com (NASDAQ:WIX) with a Buy rating and $126 per share price target in a note Friday.
Analysts said the company is "building a web of free cash flow and margin expansion."
"Consider Wix the TurboTax of website building, making it easy for individuals & SMBs to start a website. Wix is the top participant in the category with 258mn registered users/4mn+ premium subs," analysts noted.
"In 2019, the company began moving upmarket, with customer mix still trending toward SMB/Professionals, a less competitive space likely carrying higher long-term margins. We like Wix’s underappreciated margin inflection story (mgmt. expects FCF margin to grow from just 4% in 2021 to 25% in 2025), as well as potential for new products to accelerate growth," they added.
The investment bank also noted that the company is well-positioned to leverage AI with new products.
"We also like Wix’s AI strategy, making it less at-risk than some believe after the stock was included in AI-Risk buckets in early 2023 (alongside other website builders like SQSP)," analysts said.