Barclays upgrades Wix.com rating, flags possible "risk" from Israel-Hamas conflict
Investing.com -- Shares in Wix.com (NASDAQ:WIX) were higher in early U.S. trading on Wednesday after analysts at Barclays upgraded their rating of the cloud-based web development service provider to "overweight" from "equal weight" despite flagging some concerns over possible risks posed to the Israeli business by ongoing violence in the Middle East.
The analysts noted that the company, which offers tools to help small businesses build and operate their websites, has a "very attractive" valuation even after a "steady cadence" of stronger-than-anticipated earnings.
In particular, they argued that Wix's loyalty program for agencies and freelancers who use the platform to build websites for their clients will be a "driver of outsized growth."
In its July-September quarter, Wix reported higher-than-projected income of $1.10 per diluted share, excluding one-time items, up from $0.06 a share in the corresponding period last year.
The firm also upgraded its 2023 revenue forecast to $1.558 billion to $1.563 billion from a prior range of $1.543B to $1.558B, saying it had been boosted by "outperformance in the first three quarters" of the year.
Wix President Zir Nohar added that the Tel Aviv-based company has seen "relatively insignificant" delays to its operations following the outbreak of the war between Israel and Hamas in October. Wix had about 5% of its global workforce called up for reserve duty in Israel, although development teams outside of the country were able to "counterbalance" the impact of the loss of staff, Zohar noted.
The Barclays analysts said the exposure of Wix's revenue to the hostilities is "immaterial" as its "critical infrastructure" is mostly located in other foreign locations. However, they warned that "a significant proportion of employees being located [in Israel] could prove to be a risk as the current Middle East conflict evolves."
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Barclays upgrades Wix.com rating, flags possible "risk" from Israel-Hamas conflict
