Market Overview

Wix Reports Q1 Results: 4 Sell-Side Takes

Wix Reports Q1 Results: 4 Sell-Side Takes

The web development platform Wix.Com Ltd (NASDAQ: WIX)'s near-term cash strategy may put off investors as it spends money to boost collections — but the payoff should be worth it, sell-side analysts said Friday.

Wix reported revenue of $174 million Thursday, just beating the consensus estimate, but had earnings of 3 cents per share, missing the 5-cents-per-share estimate.

The Analysts

Bank of America Merrill Lynch analyst Nat Schindler reiterated a Buy rating on Wix and raised the price target from $130 to $155.

Guggenheim’s Ken Wong maintained a Buy rating on Wix and increased the target price from $130 to $150.

Oppenheimer’s Jason Helfstein maintained an Outperform rating and raised the target price from $122 to $140.

KeyBanc Capital Markets' Josh Beck maintained a Sector Weight rating. 

The Takeaways 

BofA's Schindler said management’s cut to free cash flow guidance will likely pressure the stock. The company said it has to spend some money as it invests in a platform aimed at boosting collections growth. But that investment should bear fruit, Schindler said.

“We continue to see Wix as one of the most consistent growth plays in mid-cap Internet and estimates for '19 are likely to once again be higher than pre-print Street estimates in the end,” the analyst said in a Thursday note. 

Guggenheim's Wong also cited the same investment intended to boost collections as one that's likely to dampen investors’ spirits. But he also pointed to the potential result, which the company said should be a 3x return on the investment.

Monetization Story

Oppenheimer’s Helfstein outlined a dual story at Wix, with the company continuing to shift from conversion to monetization. Premium subscription addition slowed a bit in the quarter, but collections per sub increased, the analyst said in a Friday note. 

The target price increase is justified by the company’s increased focus on monetization, prospects for price increases and new product adoption, he said. 

KeyBanc’s Beck cited impressive “innovation velocity” at Wix as it tries to shift from a DIY web-building tool company to a platform aimed more at professional web developers and agencies.

KeyBanc continues to have a constructive view on Wix's product innovation and strategy, but is waiting to see how the new focus does in a competitive commerce tech sector, the analyst said. 

Price Action

Wix shares were trading up 3.26 percent at $139.26 at the time of publication Friday.

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

Aug 2020JMP SecuritiesMaintainsOutperform
Aug 2020Raymond JamesMaintainsOutperform
Aug 2020NeedhamMaintainsBuy

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