Wix.com's New Business, Pricing Power Likely To Contribute To FCF, Analyst Says
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
Don't miss real-time alerts on your stocks - join Benzinga Pro for free! Try the tool that will help you invest smarter, faster, and better.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.