Wix.com Gets Target Boost As Analyst Reverses From Value To Growth Software Stocks

  • Piper Sandler analyst Clarke Jeffries upgrades Wix.com Ltd WIX from Neutral to Overweight, raising the price target from $99 to $120.
  • The analyst believes growth estimates have bottomed, even if net new ARR in 2023 is 50% below 2019 levels, revenue would still be within guidance. 
  • With a cash flow breakeven known for Partners (25% of the mix), the remainder of the $215 million+ annualized cost savings plan should fall to Self-Creator (SC). Even with <15% growth in SC, that improvement in OpEx has the analyst confident in over $425 million of FCF in CY25.
  • Post-4Q22, the analyst believes growth headwinds for post-COVID subscription cohorts are closing, price increases fuel growth without sizable offsetting churn, and the profitability delta between the top & bottom players in the space will likely compress to a narrower range than ever before. 
  • The analyst flipped from value to growth across his digital presence coverage.
  • Piper Sandler downgrades GoDaddy Inc GDDY from Overweight to Neutral and lowers the price target from $100 to $88.
  • Compression to MSD growth has jeopardized the company's ability to produce $8+ FCF/share by 2024, limiting the upside.
  • The analyst believes that only significant bookings or profitability inflection in the coming quarters could prevent risk for further top-line deceleration, potentially below MSD.
  • Price Action: WIX shares traded higher by 6.92% at $94.50 on the last check Tuesday.
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