On Thursday, Citi updated its stance on Wix.com (NASDAQ:WIX), a leading cloud-based development platform, by increasing the price target to $260 from the previous $202, while maintaining a Buy rating on the shares. This adjustment follows Wix's robust performance in the third quarter of 2024 and an optimistic forecast for the fourth quarter, which has bolstered confidence in the company's growth trajectory heading into 2025.
Wix's third-quarter results showcased an 18% increase in bookings, and the company's Partners business, particularly the Studio segment, continues to draw new and larger agencies. According to Wix's management, the company has tapped into 3-5% of the total available market (TAM) for agencies and only 1% of the potential dollar spend. This assessment aligns with the checks and TAM analysis conducted intra-quarter, underscoring the relevance of Wix's market position.
The management team at Wix is also refocusing efforts on the Self Creators segment to stimulate growth and bring fresh vitality to the product offering. Additionally, Wix anticipates the upcoming release of new AI products, which are expected to generate direct revenue for the company.
In terms of profitability, Wix is poised for margin expansion. The company has established the necessary cost structure, and any further revenue growth is predicted to significantly enhance free cash flow (FCF) due to high incremental rates. This financial outlook reflects Wix's strategic planning and effective cost management, positioning the company for sustained financial success.
In other recent news, Wix.com Ltd. has reported robust third-quarter results, surpassing analyst expectations. The company recorded an adjusted earnings per share of $1.50, outpacing the anticipated $1.44. Additionally, revenue saw a 13% year-over-year increase, reaching $444.7 million, slightly above the consensus of $443.97 million. This performance was largely driven by a 16% YoY surge in bookings growth, attributable to the company's Studio product, AI innovations, and robust commerce activity.
Barclays (LON:BARC) upgraded its price target for Wix.com to $236, maintaining an Overweight rating, based on the company's strong performance and rapidly improving free cash flow margin. Meanwhile, Morgan Stanley (NYSE:MS) maintained an Equalweight rating, noting a strong outlook for fiscal year 2025 based on the company's recent performance and raised guidance for the fourth quarter.
InvestingPro Insights
Wix.com's recent performance and Citi's bullish outlook are further supported by real-time data from InvestingPro. The company's market capitalization stands at $11.77 billion, reflecting its significant presence in the cloud-based development platform market. Wix's revenue growth of 12.85% over the last twelve months as of Q2 2024 aligns with the strong bookings increase mentioned in the article, indicating consistent expansion.
InvestingPro Tips highlight that Wix's net income is expected to grow this year, which corresponds with the company's anticipated margin expansion and improved free cash flow mentioned in the article. Additionally, the tip that Wix operates with a moderate level of debt suggests financial stability as the company pursues growth opportunities.
It's worth noting that Wix has shown a remarkable 1-year price total return of 117.51%, reflecting investor confidence in the company's strategy and market position. This performance is particularly relevant given the article's discussion of Wix's potential in the agency market and upcoming AI product releases.
For investors seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for Wix.com, providing deeper insights into the company's financial health and market position.
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