Piper Sandler raises Wix.com target to $249 on strong growth

On Thursday, Piper Sandler adjusted its outlook on Wix.com (NASDAQ:WIX), a leading cloud-based development platform, by increasing the price target to $249 from the previous $200. The firm maintained an Overweight rating on the company's shares. This revision reflects the company's impressive third-quarter performance, which showcased a 16% growth in bookings and a robust free cash flow (FCF) margin of 29%, no longer impacted by headquarters costs.

The analyst from Piper Sandler noted that Wix.com's fourth-quarter guidance suggests that the growth in bookings is expected to further accelerate to between 16% and 18%, with an implied bookings figure surpassing $460 million. Additionally, the revenue from partners, which includes agencies using Wix's Studio and existing partners, grew by 30%. This significant growth has been attributed to the addition of new agencies empowered by Studio and the sustained strength of project pipelines with existing partners.

Wix.com has been recognized for reaching a pivotal point in its Partners business after years of investment. The early achievement of margin targets within this segment, combined with high underlying margins from Self-Creators, has led to an overall FCF margin of 29%. According to Piper Sandler, this margin is a testament to the company's progress and the early realization of its financial goals in the Partners segment.

Looking ahead, the analyst anticipates that Wix.com's operational expenditure growth in the coming year will be approximately half the rate of its top-line growth. This projection sets the stage for the company to experience further expansion in free cash flow in 2025. The upward adjustment in the price target to $249 is based on the company's FCF outcomes, which are pacing ahead of expectations.

In other recent news, Wix.com has experienced several positive developments. Needham raised its target for Wix.com to $235, citing growth in the company's revenues and bookings. Similarly, RBC Capital Markets increased its price target for Wix.com from $190.00 to $245.00, attributing this to the company's successful use of artificial intelligence (AI) and improved customer economics within its subscription segment.

Moreover, Citi raised its price target for Wix.com to $260, acknowledging the company's strong third-quarter performance and optimistic fourth-quarter forecast. Barclays (LON:BARC) also lifted its target for Wix.com to $236, noting the company's solid performance and rapidly improving free cash flow margin. Morgan Stanley (NYSE:MS) maintained an Equalweight rating for Wix.com, forecasting a strong outlook for fiscal year 2025.

Wix.com's third-quarter results surpassed analyst expectations with an adjusted earnings per share of $1.50 and revenue of $444.7 million, a 13% year-over-year increase. The company attributes this performance to a 16% surge in bookings growth, driven by its Studio product, AI innovations, and robust commerce activity.

Furthermore, Wix.com has raised its full-year 2024 revenue guidance to a range of $1.757-$1.764 billion, up from the earlier forecast of $1.747-$1.761 billion. The company is also planning to introduce more AI-based products across its subscription services in 2025, which are expected to enhance its offerings and potentially boost its financial performance.

InvestingPro Insights

To complement Piper Sandler's optimistic outlook on Wix.com (NASDAQ:WIX), recent data from InvestingPro provides additional context to the company's financial performance and market position.

Wix.com's market capitalization stands at $11.77 billion, reflecting investor confidence in the company's growth trajectory. The company's revenue for the last twelve months as of Q2 2024 reached $1.65 billion, with a notable revenue growth of 12.85% over the same period. This aligns with the analyst's observations of accelerating bookings growth and strong performance in the Partners segment.

InvestingPro Tips highlight that Wix.com's net income is expected to grow this year, which supports the analyst's projection of expanding free cash flow. Additionally, the company has been profitable over the last twelve months, with a basic EPS from continuing operations of $1.30, indicating a transition to profitability that could further boost investor confidence.

The stock's recent performance has been particularly strong, with InvestingPro data showing a 21.92% price return over the last month and an impressive 117.51% return over the past year. This surge aligns with the company's improving financial metrics and the market's positive reception of its recent quarterly results.

It's worth noting that Wix.com is trading near its 52-week high, with the current price at 98.32% of its peak. While this reflects strong momentum, investors should be aware that the RSI suggests the stock may be in overbought territory, according to one of the InvestingPro Tips.

For readers interested in a more comprehensive analysis, InvestingPro offers 17 additional tips for Wix.com, providing a deeper understanding of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.