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KeyBanc Takes Neutral Stance On Wix

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KeyBanc Takes Neutral Stance On Wix

Cloud-based website development platform Wix.Com Ltd (NASDAQ: WIX) is in the early stages of a strategic shift and has shown "impressive innovation" so far, according to KeyBanc Capital Markets. 

The Analyst

Josh Beck initiated coverage of Wix with a Sector Weight rating.

The Thesis

Wix's core product was a do-it-yourself web building platform, but the company is shifting to offer a suite of commerce tools to better meet the needs of agencies and developers, Beck said in the Sunday initiation note. (See his track record here.) 

Bulls and bears will debate the company's ability to succeed in its transformation and investors are likely asking three key questions, the analyst said: 

The first relates to Wix's new "Code" platform, which adds database capabilities and APIs. Under a bull case scenario, this could represent a "monumental launch" for the Israel-based company, as it should be able to attract agencies and pro developers, Beck said. As a result, Wix could bring more high-GMV stores to its platform, he said. 

Wix's 2019 guidance came in weak, and this begs the question of whether it's a signal of market saturation or consistent with management's transformation, the analyst said. Under a bull case scenario, Wix is right to de-emphasize low-end customers like the $5 Connect plan to better focus on agencies and developers, he said. The end result: lower subscribers on a nominal basis, but a higher value on an absolute basis.

The third question relates to Wix's competitive standing among its peers. Bulls would argue that the market for e-commerce-related products hasn't experienced a "noticeable shift" from past years, Beck said. 

Price Action

Wix shares were trading up 0.3 percent at $133.92 shortly before the close Monday. 

Related Links:

Guggenheim On Software: Bullish On Wix, HubSpot, Neutral On Altair

What To Do With Wix's Stock?

Photo courtesy of Wix. 

Latest Ratings for WIX

DateFirmActionFromTo
May 2019MaintainsOutperform
May 2019MaintainsBuy
Apr 2019Initiates Coverage OnSector Weight

View More Analyst Ratings for WIX
View the Latest Analyst Ratings

Posted-In: Josh Beck KeyBanc Capital MarketsAnalyst Color Initiation Analyst Ratings

 

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