On Monday, Jefferies, a global investment banking firm, raised the price target for Wix.com (NASDAQ:WIX), a leading cloud-based development platform, from $150.00 to $160.00 while maintaining a 'Buy' rating on the stock. The firm cited the company's continued strong performance and positive growth indicators as the reasons for the increase.
The analyst noted that Wix.com has carried forward its robust momentum from the fourth quarter into the first quarter, with signs pointing toward acceleration. The high end of the company's revenue guidance for the fiscal year 2024 indicates a year-over-year increase of 11-13%, which is above the 12.5% growth rate reported for fiscal year 2023. Additionally, the bookings guidance for fiscal year 2024 is set at 12-14%, bolstering confidence in revenue acceleration for fiscal year 2025.
Furthermore, Wix.com's free cash flow (FCF) margins are expected to show a significant improvement, with the fiscal year 2024 guide projecting a 26% margin compared to the 2% margin in fiscal year 2022. This inflection in FCF margins is seen as a positive sign for the company's financial health.
The analyst also highlighted the potential impact of Wix.com's AI Website Builder and Studio, as well as recent price increases. These contributions are still in the early stages, suggesting there is more growth to be expected. When comparing enterprise value to sales (EV/S) multiples, Wix.com is considered attractive at 4.0x, especially when measured against competitors like GoDaddy (NYSE:GDDY) at 4.8x and the take-out multiple of 5.0x for Squarespace (SQSP).
InvestingPro Insights
Jefferies' upbeat assessment of Wix.com is further substantiated by current InvestingPro data, which shows a market capitalization of $7.59 billion and a substantial year-over-year revenue growth of 12.54% as of the last twelve months ending Q4 2023. This aligns with the analyst's recognition of Wix's strong performance and positive growth indicators. Additionally, the company's gross profit margin stands at a healthy 67.18%, which is indicative of its operational efficiency and potential for improved free cash flow margins, as highlighted by Jefferies.
On the valuation front, Wix.com is trading at a high P/E ratio of 233.33, suggesting a premium market valuation that Jefferies seems to endorse given the company's growth prospects. Meanwhile, InvestingPro Tips reveal that analysts predict the company will be profitable this year, and there has been a significant price uptick over the last six months, with a 38.04% return, reflecting investor confidence in Wix's trajectory.
For readers looking to delve deeper into Wix.com's financials and future outlook, InvestingPro offers additional insights, including 11 more InvestingPro Tips. To access these valuable resources and enhance your investment strategy, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/WIX.
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