JMP Securities analyst Andrew Boone reiterates Wix.com Ltd (NASDAQ: WIX) with a Market Outperform and a $130 price target.
The analyst attended Wix's analyst happy hour in NYC with CEO Avishai Abrahami and CFO Lior Shemesh, believing that Wix can sustain low-teens growth driven by Partners.
Macro is still challenging but improving. Importantly, with Wix powering ~50% of new website builds, should macro rebound, it believes there is an upside to its analyst day guidance of ~13% compounded revenue growth to 2025.
While he views Wix as a relatively easy-to-use website builder, AI is accelerating this process, helping more self-creators finish sites and improving conversion. Additionally, Wix is enabling AI to recommend products, creating upsell opportunities.
With Wix building AI into every product, he believes there is the potential to increase efficiency across the business.
The most significant opportunity in the near term is customer care, as this week, Wix incorporated ChatGPT4 into its chatbots.
The Partner opportunity could be 10x that of self-creators. Given that Studio has a product market fit, he thinks 30% partner growth is achievable.
Boone justifies the price target and valuation multiple given Wix's product catalyst in Studio, significant TAM, and expanding profitability and FCF.
The analyst projects a Q3 revenue of $389 million.
Benchmark analyst Mark Zgutowicz reiterates Wix.com with a Buy and a $130 price target.
WIX held an Analyst and investor reception in NYC, which followed its formal Analyst Day in August.
Management's confidence in achieving last month's raised FY25 targets remains resolute and, if completed, is well underappreciated in the stock.
WIX indicated GAAP operating profitability is achievable in the second half of FY24 following the (gradual) launch of Studio in the second half of FY23 alongside a ramp in 3Q direct marketing spend.
Partners direct marketing spend has traditionally been close to zero, suggesting better-than-expected TTM Self Creators operating leverage following 2Q's sequential reacceleration in revenue growth on -50% direct advertising spend (compared to FY21 levels).
Further, Customer Care remains another long-term operating lever as AI integration/capabilities mature.
While management remains excited about its B2B prospects, the true game changer for long-term revenue growth will be Agency-driven.
Management believes Enterprise clients are now serviceable through WIX and views its positioning within non-commerce as still enviable.
The analyst projects a Q3 revenue of $391 million.
Price Action: WIX shares are trading higher by 1.64% to $96.79 on the last check Wednesday.