Benchmark lowers Wix.com stock price target to $185 on AI investment costs

Investing.com - Benchmark has reduced its price target on Wix.com (NASDAQ:WIX) to $185.00 from $230.00 while maintaining a Buy rating on the stock. This comes as Wix shares have fallen dramatically, with InvestingPro data showing a 52.6% decline year-to-date and a 44% drop over the past six months. Despite this pullback, InvestingPro analysis suggests the stock is currently undervalued.

The firm cited increased marketing and AI computing costs that exceed market expectations as key factors complicating the company’s near-term leverage outlook, despite accelerated bookings and revenue growth through year-end. According to InvestingPro data, Wix maintains a PEG ratio of 0.84, indicating it’s trading at a reasonable valuation relative to its expected growth rate.

Wix.com has projected over $50 million in Base44 Annual Recurring Revenue (ARR) by the end of 2025, up from its previous forecast of $40-50 million, and reported approximately 2 million users for the service, with about half being new customers.

According to Benchmark, Wix.com’s core business margins continue to show year-over-year improvement, suggesting that margin pressure is entirely related to its Base44 platform investments.

The firm now conservatively forecasts Wix.com’s 2026 core revenue to grow 8.1% year-over-year, excluding an estimated $83 million in Base44 revenue.

In other recent news, Wix.com reported third-quarter earnings that exceeded analyst expectations for bookings and revenue, though profit fell short due to increased spending on its Base44 offering. RBC Capital noted that while the company’s Base44 vibe coding asset significantly contributed to bookings growth, it also put pressure on margins, leading to a lowered price target of $190. Cantor Fitzgerald also reduced its price target to $135, citing increased costs for compute resources and marketing related to Base44. Needham adjusted its price target to $140, reflecting a 15% cut in free cash flow estimates due to investments in Base44. Scotiabank lowered its price target to $175, despite acknowledging strong third-quarter results and raised full-year guidance, highlighting the impact of AI investment costs. Citizens reduced its price target to $185, expressing concerns about free cash flow as Wix shifts focus back to growth investments for Base44. Despite these adjustments, several firms maintained positive ratings, indicating confidence in Wix’s long-term potential.

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