JMP Initiates Coverage On Wix As It's Poised To Take Share In Web Development Market

• Shares of Wix.Com Ltd WIX are up 17 percent year-to-date and touched a high of $28 on July 31.
• JMP Securities’ Ignatius Njokuinjoku initiated coverage of the company with a Market Outperform rating and a price target of $28.
• The company’s popular platform, expanding product portfolio and product refreshes position it well to take up share in the web development market, Njokuinjoku stated.

Wix.com is a leading do-it-yourself, website-building platform with over 72 million registered users and more than 1.6 million premium subscribers.

The company’s investment in new products like WixHotels, WixMusic, WixStores and its focus on international expansion are expected to drive faster conversion of free to paid users, analyst Ignatius Njokuinjoku mentioned.

Wix’s strength lies in its expanding product portfolio and product refreshes that offer an attractive value proposition to SMBs. Njokuinjoku added that the company’s localized products should enable it to attract a high number of premium subscribers in the international markets.

Wix.com is expected to record collections of $323 million, up 34 percent Y/Y, revenue of $271 million, up 34 percent Y/Y, EBITDA of $36.4 million, representing 13.4 percent margin, and PF EPS of ($0.44) in 2016.

The analyst commented, “Wix’s 70% revenue visibility has led to efficient expense management, particularly in selling and marketing, where we see the company benefiting from significant leverage this year.” The company’s sales and marketing as a percentage of collections is expected to decline from 49 percent in 2015 to 43 percent in 2016.