On Wednesday, Raymond James resumed coverage of Wix.com Ltd. (NASDAQ:WIX), a leading cloud-based web development platform, with a positive outlook. The firm issued an Outperform rating, accompanied by a new share price target of $160.00.
The analyst from Raymond James highlighted Wix's potential in the web services sector, noting that the company is well-positioned to capitalize on opportunities presented by generative artificial intelligence (GenAI). These advancements are expected to integrate more seamless creation features, such as text and templates, into Wix's platform.
Wix's strategy to become the "Partner of Choice" for its users was emphasized as a key driver for the company's growth. The firm anticipates that Wix's partner momentum will contribute to high single-digit growth.
Additionally, the use of AI tools on the Wix platform is projected to enhance freemium conversion rates, with every 0.1% increase in user penetration potentially leading to a low single-digit growth improvement in premium subscriptions.
The valuation of $160.00 per share is based on a 19.9x projected 2025 enterprise value to EBITDA (EV/EBITDA) multiple, or 6.7x projected 2025 enterprise value to gross profit (EV/GP). These multiples are generally lower than those of Wix's peers in the small and medium-sized business (SMB) and commerce software sectors.
According to Raymond James, the bullish scenario for Wix could see a significant upside, with the spread between the optimistic and pessimistic cases being 109%. The firm's positive stance on Wix is underpinned by the belief that growth and margin prospects will be bolstered by the company's credible growth opportunities and partner dynamics.
InvestingPro Insights
Recent data from InvestingPro underscores the growth trajectory for Wix.com Ltd. (NASDAQ:WIX), complementing the upbeat analysis from Raymond James. The company is trading at a high earnings multiple, with a P/E Ratio (Adjusted) for the last twelve months as of Q4 2023 standing at 234.44. This high valuation is reflective of investor confidence in the company's growth prospects, particularly as analysts predict Wix will be profitable this year, a sentiment that aligns with Raymond James' positive outlook.
InvestingPro Tips also indicate that Wix operates with a moderate level of debt, suggesting a balanced approach to leveraging and growth. With a significant revenue growth of 12.54% in the last twelve months as of Q4 2023, and a robust gross profit margin of 67.18%, Wix's financial health appears solid. Furthermore, the company has experienced a large price uptick over the last six months, with a 55.69% total return, underscoring the market's positive reception to Wix's strategic initiatives.
For readers looking to delve deeper into Wix's financials and future potential, there are additional InvestingPro Tips available at: https://www.investing.com/pro/WIX. These tips offer insights into various aspects of the company's performance and valuation. To access these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.