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WIX Stock Soars 33% Year to Date: Will the Rally Continue?

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Wix.com’s (WIX - Free Report) shares have been performing well on the trading front, with a gain of 32.5% year to date compared with the S&P 500 composite and sub-industry’s growth of 16.2% and 1.8%, respectively.

The stock has gained 4.2% since announcing solid second-quarter 2024 results on Aug 7. The stock is still trading 8.7% below its 52-week high of $178.65, which makes it relatively affordable for investors.

Headquartered in Tel Aviv, Israel and founded in 2006, WIX is a cloud-based web development platform. It offers solutions that enable businesses, organizations, professionals and individuals to develop customized websites and application platforms and grow the companies’ online presence.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with the average surprise being 29.8%.

Zacks Investment Research
Image Source: Zacks Investment Research

WIX Studio & AI Strategy Propelling Growth

Increasing adoption of the product portfolio, especially various AI products and WIX Studio, has been driving WIX’s performance. The addition of new features and enhancements to WIX Studio is driving its uptake. Management highlighted that the number of Studio accounts and rate of new Partners joining the Wix platform through Studio continues to better expectations. 

The addition of new AI-powered offerings to its product portfolio is another tailwind. WIX is also focusing on embedding AI assistants across its platform and has released 17 AI business assistants so far. 

In June 2024, Wix launched advanced AI creation capabilities for its mobile app builder. The initiative is set to empower users to effortlessly craft professional and fully customizable applications. By leveraging AI technology, it revolutionizes the way business apps for iOS and Android can be designed and altered. 

The company also expanded the availability of its AI Website Builder in different languages. Besides English, AI Website Builder is now available to global users in French, German, Portuguese, Spanish, Italian, Japanese, Turkish and Korean. This initiative aids users in building websites in their preferred language. 

WIX’s second-quarter total revenues increased 12% year over year to $435.7 million and beat the Zacks Consensus Estimate of $433.6 million. Bookings of $458.4 million improved 15% year over year. Creative Subscriptions’ bookings increased 12% year over year to $329 million. Business Solutions’ bookings rose 24% to $129.4 million.

Partners revenues in the second quarter were $148.4 million, or 34% of total revenues, up 29% year over year. The increase was driven by market share gains resulting from the onboarding of new agencies and freelancers.

Outlook Revised

Continued strong momentum in the first half of 2024 led WIX to upgrade the outlook for bookings, revenues and free cash flow for the year.

Total bookings are expected between $1,802 million and $1,822 million, compared with a previous range of $1,796-$1,826 million.

Total revenues are now expected to be in the range of $1,747-$1,761 million (previous projection:  $1,738 million to $1,761 million).

Free cash flow, excluding headquarters costs, is expected between $460 million and $470 million, or 26-27% of revenues in 2024. Earlier, free cash flow was expected in the range of $445-$455 million, or 26% of revenues.

Estimates Moving North

The estimates have also moved northward in the past 60 days. The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) has increased 7.3% and 2.4%, respectively, reflecting analysts’ optimism.

The estimated figures for 2024 and 2025 EPS, $5.86 and $6.93, indicate a rise of 33.5% and 18.3%, respectively, from the prior-year actuals. The long-term earnings growth rate is 22.4%.

The Zacks Consensus Estimate for WIX’s 2024 and 2025 revenues is pegged at $1.75 billion and $1.99 billion, respectively, which indicates growth of 12.4% and 13.2% from the year-ago levels.

Headwinds Persist

However, unfavorable foreign currency movement and weak global macroeconomic conditions are headwinds.

Increasing investments in product development, infrastructure and platform, along with stiff competition in the e-commerce marketplace, remain concerns for this Zacks Rank #3 (Hold) stock.

Stocks to Consider

Some better-ranked stocks worth consideration in the broader technology space are Badger Meter (BMI - Free Report) , Manhattan Associates (MANH - Free Report) and ANSYS (ANSS - Free Report) . Badger Meter and Manhattan Associates sport a Zacks Rank #1 (Strong Buy) each, while ANSYS carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $4.06, up 4.4% in the past 30 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%. Its shares have risen 26.1% in the past year.

The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.72, up 3.7% in the past 30 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing once, with the average surprise being 4.8%. Its shares have risen 12.1% in the past year.

The Zacks Consensus Estimate for MANH’s 2024 EPS is pegged at $4.26. MANH’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 26.6%. The stock has surged 37.7% in the past year.


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