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Investing.com - Evercore ISI has reduced its price target on Wix.com (NASDAQ:WIX) to $160 from $250 while maintaining an Outperform rating, citing increased marketing expenses and lower gross margin forecasts. Despite the reduction, Wix appears significantly undervalued according to InvestingPro Fair Value metrics, with the stock currently trading at $100.87, near its 52-week low and down 29.57% over the past six months.
The web development platform company reported mixed third-quarter results with revenue, bookings, and gross profit modestly exceeding Street consensus. Free cash flow was in line with expectations when adjusted for Base44 earn-out payments, while non-GAAP operating income fell short due to higher marketing expenses supporting the Base44 acquisition. Wix’s revenue growth remains solid at 13.04% over the last twelve months, with a gross profit margin of 68.39%.
Wix raised its fiscal year 2025 bookings and revenue guidance based on strength in both its core business and Base44, which is now expected to exit FY25 with over $50 million in annual recurring revenue, up from the previous outlook of $40-50 million. However, the company lowered its gross margin guidance to 68-69% from 69% and increased its non-GAAP operating expense forecast to 50% of revenue from 49%. InvestingPro data shows Wix trading at a P/E ratio of 36.55, but with a favorable PEG ratio of 0.34, suggesting it may be undervalued relative to its growth potential.
The revised guidance suggests approximately 300 basis points of gross margin contraction and significant acceleration in marketing spend to support Base44 in Q4 2025, trends Evercore expects to continue into fiscal year 2026. This level of investment reportedly diverges from investor expectations, contributing to a 19% intraday drop in Wix shares.
Despite these challenges, Evercore remains encouraged by strength in Wix’s core business and views Base44 as a compelling opportunity with growing category audience share, now at approximately 10%, and increasing annual recurring revenue that could command a significant valuation as a standalone business. Analyst consensus remains bullish with targets ranging from $160 to $255. For deeper insights on Wix’s financial health and growth prospects, InvestingPro offers a comprehensive research report, one of 1,400+ available for top US equities.
In other recent news, Wix.com reported revenue of $505 million and free cash flow of $159 million, both surpassing expectations of $502 million and $153 million, respectively. BofA Securities adjusted its price target for Wix.com to $170 from $210, maintaining a Buy rating. Benchmark also reiterated its Buy rating with a price target of $230, despite potential downward revisions to the company’s 2025 Bookings growth guidance due to foreign exchange factors. Additionally, Wix.com announced its Annual General Meeting of Shareholders scheduled for December 18 in Tel Aviv, where various proposals will be voted on.
In operational developments, Wix.com has fully integrated Royal Mail into its Wix Shipping service, offering UK merchants automated shipping operations and exclusive pricing. Furthermore, Wix.com has entered a strategic collaboration with PayPal, enabling merchants to utilize AI-powered product discovery and commerce capabilities. This partnership allows Wix merchants to make their product catalogs accessible on AI platforms and accept payments through PayPal’s agentic commerce solution. These recent developments highlight Wix.com’s ongoing efforts to enhance its platform and expand its services for merchants.
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