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Wix.com's New Business, Pricing Power Likely To Contribute To FCF, Analyst Says

Anusuya Lahiri
·1 min read

  • RBC Capital analyst Brad Erickson upgraded Wix.com Ltd (NASDAQ: WIX) from Sector Perform to Outperform and raised the price target from $80 to $100.

  • The re-rating reflected lightly raised estimates, more appropriately reflecting price increases.

  • The analyst saw WIX as a solid defensive play benefiting from the structurally higher new business formation (NBF) against pre-COVID while exerting its pricing power for its sticky subscription business.

  • Erickson estimate WIX has ~30% and ~80% of its price increases yet to flow through in '23 on subscription collections & revenue, respectively, significantly limiting downside risk to estimates.

  • The company has pricing power where it can likely sustainably raise prices every 3-4 years going forward.

  • The analyst believes structurally higher NBF vs. pre-COVID is primarily here to stay.

  • Digital solutions for enabling business formation have never been more abundant where WIX nicely attaches to the creator economy theme along with a potential countercyclical play on outsized tech job losses.

  • The analyst liked WIX's differentiated focus on product development, particularly for Ecom solutions, where the opportunity to grow and gain share in agency channels and from WordPress remains significant.

  • The analyst noted that Wix is on the path toward significant & underappreciated FCF growth over the next several years.

  • Price Action: WIX shares traded higher by 2.64% at $80.17 on the last check Thursday.

Latest Ratings for WIX

Date

Firm

Action

From

To

Mar 2022

Atlantic Equities

Downgrades

Overweight

Neutral

Feb 2022

RBC Capital

Maintains

Sector Perform

Feb 2022

JMP Securities

Maintains

Market Outperform

View More Analyst Ratings for WIX

View the Latest Analyst Ratings

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