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Tuesday, CFRA analysts downgraded Wix.com stock (NASDAQ:WIX) from Buy to Hold and significantly reduced the price target to $159 from the previous $266. The revision reflects a reassessment of the company’s valuation due to its slower growth trajectory. According to InvestingPro data, Wix’s revenue growth has moderated to 12.74% in the last twelve months, with the company maintaining a substantial market capitalization of $9.06 billion. Wix.com, which previously enjoyed over 25% annual growth rates from 2014 to 2021, has seen this figure decline to below 15% in the past three years. As a result, CFRA has moved away from its prior price-to-sales valuation method. InvestingPro analysis reveals that while the company trades at a high P/E ratio of 63.65, it maintains strong fundamentals with a healthy gross profit margin of 67.93%.
The analysts at CFRA have adjusted their valuation to 22 times Wix’s projected 2025 earnings per share, a figure that falls below the company’s five-year average price-to-earnings ratio of 71 times. This new valuation takes into account a more stable margin outlook for Wix, even as the company’s topline growth profile has diminished. Notably, InvestingPro subscribers have access to 15 additional key insights about Wix’s valuation and growth prospects, including detailed analysis of its earnings potential and market positioning.
Despite an 18% year-over-year increase in total bookings and management’s guidance for 2025 revenue growth of 12%-14%, CFRA anticipates that these benefits will subside as the pricing tailwinds that Wix has been experiencing are expected to fade in the first quarter of 2025. CFRA projects that Wix’s revenue growth will stabilize at 13% for both 2025 and 2026, with operating margins improving to 6.8% and 7.2% for those respective years, up from 5.7% in 2024.
The firm maintains its non-GAAP earnings per share (EPS) estimate for Wix at $7.24 for 2025 and forecasts an EPS of $8.75 for 2026. The downgrade to a Hold rating suggests that CFRA believes any significant upside in Wix’s stock will be limited in the near term. The analysts argue that a clearer demonstration of the company’s potential to achieve closer to 20% annual revenue growth would be needed to become more positive on the stock’s prospects.
In other recent news, Wix.com Ltd. has announced a $200 million share buyback program, indicating confidence in its cash flow capabilities and a commitment to enhancing shareholder value. This program will be executed over time, adhering to U.S. securities laws, and may include ordinary shares and/or convertible notes. Additionally, Wells Fargo (NYSE:WFC) has upgraded Wix.com’s stock rating from Underweight to Equal Weight, setting a price target of $176, citing potential price increases in the fiscal year 2026 that could positively impact bookings and free cash flow.
Benchmark has also raised Wix.com’s price target to $260 from $250, maintaining a Buy rating, following the company’s guidance for 2025 amidst foreign exchange headwinds. Despite these headwinds, Benchmark notes that Wix.com’s free cash flow margin expectations remain robust. In product news, Wix has introduced Astro, an AI-powered business assistant aimed at streamlining site management tasks for users, enhancing efficiency and business insights. Furthermore, Wix has launched a new automation builder designed to simplify complex business workflows, offering a visual canvas for users to create tailored automation logic. These developments reflect Wix’s ongoing efforts to innovate and support its users in managing their digital presence effectively.
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