Yahoo Finance WIX Stock Surges 27.9% Year to Date: Will the Rally Continue?
Wix.com’s WIX shares have been performing well on the trading front, with a gain of 27.9% year to date compared with the S&P 500 composite and sub-industry’s growth of 15% and 9.4%, respectively.
Solid financial performance has been driving a good run on the trading front. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average surprise of 56.48%.
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 their online presence.
The stock has gained 15.9% since announcing solid first-quarter 2024 results on May 20. The stock price is still trading at 11.9%, below its 52-week high, which makes it relatively affordable for investors.
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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 13% and 4.2%, respectively, in the past 60 days, reflecting analysts’ optimism.
The consensus estimate for 2024 and 2025 EPS is expected to rise 24.4% and 24%, respectively, from the prior-year actuals to $5.46 and $6.77. The long-term earnings growth rate is 22.2%.
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 12.2% and 13.3% from the year-ago levels.
Growth Catalysts
Increasing adoption of the product portfolio, especially various AI products and WIX Studio, has been driving WIX’s performance. Higher conversion and improved monetization across the user base are additional tailwinds.
Among AI products, management highlighted that its key offering — AI Website Builder — was getting strong responses from Self Creators and Partners. This particular solution creates a professional website that meets the user’s requirements through a conversational AI chat experience.
Regarding WIX Studio, management noted that more than one million Studio accounts have been created by agencies and designers since the rollout of this product in August 2023. The rapid conversion of these new accounts has led to more Studio premium subscriptions than expected. WIX Studio also contributed to strong revenue growth from the Partners business.
The average revenues per subscription is being driven by an expansive product portfolio and strong commerce growth.
WIX’s first-quarter total revenues increased 12% year over year to $419.8 million and beat the Zacks Consensus Estimate of $417.7 million.
Solid growth in bookings and revenues led to strong free cash flow performance. Free cash flow was $105.7 million compared with $25 million in the year-ago quarter.
Outlook Upgraded
Apart from strong product traction, improving business fundamentals and a positively-trending macroenvironment led WIX to upgrade the outlook for bookings, revenues and free cash flow for 2024.
Total bookings are expected between $1,796 million and $1,826 million, compared with a previous range of $1,784-$1,813 million.
Total revenues are now expected to be in the range of $1,738-$1,761 million (previous projection: $1,726 million to $1,757 million).
Free cash flow, excluding headquarters costs, is expected between $445 million and $455 million, or 26% of revenues in 2024. Earlier, free cash flow was expected in the range of $370-$400 million, or 21% to 23% of revenues.
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 concerning for this Zacks Rank #3 (Hold) stock.
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are NVIDIA Corporation NVDA, Arista Networks ANET and Woodward WWD, currently sporting a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 EPS is pegged at $2.53. NVIDIA’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 24%. The long-term earnings growth rate is 37.6%. Shares of NVDA have risen 158.1% in the past year.
The Zacks Consensus Estimate for Arista Network’s 2024 EPS is pegged at $7.05, unchanged in the past 30 days. The long-term earnings growth rate is 16.1%. ANET’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 15.5%. Shares of ANET have gained 120.1% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2024 EPS has remained unchanged in the past 30 days at $5.88. WWD’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 26.1%. The long-term earnings growth rate is 16.5%. Shares of WWD have risen 44.2% in the past year.
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