On Monday, Oppenheimer adjusted its outlook on Wix.com Ltd (NASDAQ:WIX), a leading cloud-based development platform, increasing the stock price target to $200 from the previous $160 while maintaining an Outperform rating. The revision follows Wix's first-quarter earnings report, which demonstrated robust performance and a promising financial trajectory.
Wix.com's recent financial results outpaced market expectations, posting bookings and revenue figures of $457 million and $420 million, respectively. These numbers exceeded the consensus estimates of $452 million for bookings and $418 million for revenue. The company's Creative segment experienced a notable reacceleration, contributing to this success.
Moreover, Wix reported a healthy earnings before interest and taxes (EBIT) outperformance, with $69 million compared to the anticipated $63 million, and a record free cash flow (FCF) margin of 26%.
The management team at Wix has provided an optimistic free cash flow forecast for fiscal year 2024, projecting an increase of $75 million, which would bring the FCF outlook to a range of $445-$455 million. This adjustment is supported by an expected acceleration in second-half bookings, showing a 16% increase, and improved operating leverage.
Moreover, Wix's Studio has achieved a milestone of one million sign-ups, a development that is anticipated to create a sustainable high-lifetime value (LTV) customer base extending well beyond fiscal year 2025.
The analyst from Oppenheimer cited multiple factors for the price target increase, including the company's solid first-quarter results, the raised FCF forecast for fiscal year 2024, and the expected long-term value from the growing number of Studio sign-ups.
The analyst emphasized that the positive shift in investor sentiment following the earnings release was justified, noting that the market had been cautious prior to the announcement. The heightened price target reflects confidence in Wix's financial path, driven by a combination of short-term performance and long-term growth prospects.
InvestingPro Insights
As Wix.com Ltd (NASDAQ:WIX) continues to impress with its financial performance, insights from InvestingPro show a company poised for growth with some valuation considerations for investors. The company's market capitalization stands at a solid $9.4 billion, reflecting its significant presence in the cloud-based development platform sector.
Wix is expected to see net income growth this year, an optimistic outlook that aligns with the positive sentiment from analysts. The company's revenue growth over the last twelve months was 12.54%, indicating a steady upward trajectory in its financials.
InvestingPro Tips highlight that while Wix is trading at a high earnings multiple with a P/E ratio of 287.27, this is adjusted to 230.41 when considering the last twelve months as of Q4 2023. This high valuation may be a factor for investors to consider, especially in relation to near-term earnings growth. Moreover, the company has been trading near its 52-week high, with the price at 98.59% of this peak, suggesting investor confidence in its market position.
For those interested in exploring more about Wix's potential and financial nuances, InvestingPro offers additional insights. By using the promo code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a wealth of InvestingPro Tips. Currently, there are 12 more tips available on InvestingPro, which could further guide investment decisions and enhance understanding of Wix's market dynamics.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.