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On Thursday, Benchmark analyst Mark Zgutowicz adjusted the price target for Wix.com (NASDAQ:WIX) shares, lowering it to $230 from the previous target of $245. Despite this change, the firm continues to recommend a Buy rating for the stock. According to InvestingPro data, Wix shares have declined nearly 17% in the past week, with analyst targets ranging from $166 to $262, suggesting significant potential upside from current levels. Zgutowicz noted that Wix’s first-quarter results and second-quarter earnings outlook suggest a slowdown in sequential constant currency revenue growth, with a deceleration of 140 basis points at the lower end of guidance when compared to a two-year stack.
The analyst pointed out that the updated guidance takes into account approximately $30 million of foreign exchange headwinds previously included in the second to fourth-quarter estimates. The current reliance on growth from new customer cohorts in the near term was highlighted, along with the potential risks from broader economic factors. Benchmark’s estimates for the Partners revenue stream for the remainder of the year do not anticipate significant contributions from average revenue per subscription (ARPS) growth.
Zgutowicz also mentioned the possibility of improved performance if the macroeconomic environment gets better or through pricing adjustments associated with the expanding product set from Wix’s Studio™. Despite the concerns about a slowdown in revenue growth and uncertainties regarding a second-half rebound that does not factor in new products, the analyst remains positive. This optimism is supported by Wix’s reaffirmed free cash flow (FCF) margin guidance and better-than-expected first-quarter results, with the company generating substantial levered free cash flow of $479.6 million in the last twelve months. The company maintains a strong gross profit margin of 68% while carefully managing marketing and research and development expenses going forward.
In other recent news, Wix.com has reported a mixed set of financial results and analyst reactions following its first-quarter earnings. Despite a modest earnings beat, the company faced challenges in its Partners segment, with revenue growth decelerating to 24% year-over-year, as noted by analysts from Cantor Fitzgerald and JMP. Piper Sandler and UBS analysts revised their price targets for Wix.com, lowering them to $225 and $230, respectively, while maintaining positive ratings. These adjustments reflect concerns over slower growth in key business areas and macroeconomic uncertainties.
Raymond (NSE:RYMD) James also adjusted its price target to $250, citing Wix’s cautious financial outlook amidst transactional revenue challenges. Despite these concerns, Wix.com’s first-quarter bookings grew by 13.4% year-over-year, surpassing Wall Street expectations, as highlighted by Raymond James. The company has been actively innovating with new AI-powered products like Wixel and AI Site Chat, which analysts believe could bolster future growth. Cantor Fitzgerald maintained a $200 price target, appreciating Wix.com’s steady revenue guidance and innovation efforts. Additionally, UBS highlighted potential upside factors such as foreign exchange gains and a $400 million buyback authorization that could benefit the company’s financials moving forward.
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