Wix.Com (NASDAQ:WIX) has witnessed a 105% surge in its share price over the past year, primarily driven by the launch of new innovative features in its Wix Studio, and new AI components. These advancements have increased the conversion rate, heightened product engagement, and increased market share gains through collaborations.
The first quarter of 2024 results highlight Wix’s growth, outperforming expectations and leading to a revised, optimistic outlook for bookings and free cash flow in H2 2024. While the shares trade at a premium, strong momentum and upside potential make this a compelling option for growth-oriented investors.
Wix Expands its Product Lineup
Wix is a Software as a Service (SaaS) website builder platform renowned for assisting users in forging, managing, and expanding their digital footprint.
Wix’s suite of services includes eCommerce and business solutions, advanced SEO, and marketing tools. Its flagship product, Wix Studio, primarily targets ad agencies and advertisers. It allows partner agencies to craft bespoke templates for their clientele. The company now incorporates artificial intelligence (AI)-powered tools to serve agencies and enterprise clients.
The company’s strategic objectives include increasing its market share in the Partners Business, which experienced a 33% year-over-year growth, and fostering AI-led product innovation through the launch of new products. Price resilience and escalating AI tool usage are considered key contributors to future growth.
Analysis of Wix’s Recent Financial Results
Wix recently reported its Q1 financial results. Revenue of $419.78 million surpassed analyst expectations of $417.84 million. Earnings per share (EPS) of $1.29 also exceeded analyst estimates of $1.03.
Management has issued guidance for revenue growth of 11% to 13% for 2024 and expects total revenues to reach between $1.738 billion and $1.761 billion, an increase of $8 million from its previous outlook.
Additionally, the company has finalized a $225 million share repurchase program, buying back around 3% of its outstanding shares at an average price of $134.20 each.
What Is the Price Target for WIX Stock?
Analysts following the company have been cautiously optimistic about the stock. For instance, BofA analyst Mike McGovern recently raised the price target on the shares from $153 to $183 while maintaining a Buy rating, noting the company’s investment in AI development and the rollout of new products across more verticals.
Wix is rated a Strong Buy overall, based on the recommendations and price targets assigned by 20 analysts over the past three months. The average price target for WIX stock is $184.95, representing a potential upside of 13.04% from current levels.
The stock is volatile, sporting a beta of 1.68, but has been on an upward trajectory, climbing over 32% year-to-date. It sits at the high end of its 52-week price range of $74.41 – $178.65 and shows ongoing positive price momentum, trading above its 20-day (161.45) and 50-day (148.97) moving averages. The shares trade at a relative premium to industry peers, with a P/S ratio of 5.78x compared to the Information Technology sector average of 2.98x.
Final Analysis on WIX
Wix has experienced rapid growth over the past year, mainly attributed to unveiling new features in its Wix Studio product and the incorporation of generative artificial intelligence. Both developments have increased conversion rates, improved product engagement, and significant market share gains. Q1 results have exceeded expectations, driving an optimistic outlook for the rest of the year. Despite its premium pricing, the company’s strong momentum and substantial growth potential make it an appealing investment for growth-focused investors.
