Wix.com (WIX) PT Lowered to $68 at UBS as Firm Awaits Signs of Stabilization
UBS analyst Chris Zhang lowered the price target on Wix.com (NASDAQ: WIX) to $68.00 (from $96.00) while maintaining a Neutral rating.
The analyst commented, "Q1 results came in largely in in-line with our expectations albeit with a margin surprise vs. Street estimates. While bookings and revenue growth of ~14.5% were largely in-line with expectations, Adj. operating margin of ~5% was well below Street’s ~14% primarily on higher OpEx driven by marketing spend and just below UBSe on lower gross margins. FY revenue and bookings guide was maintained but Adj. FCF margin guide has been lowered to high-teens (vs. low- to mid-20s% prior) due to a larger foregone net interest income (~5pt FCF margin impact) than we had expected. With Base44 having reached $150mm ARR in May and Q2 total revenue growth guided to be mid-teens, core business is implied to see a steeper decel. While we believe Wix will continue to offer a leading, innovative SaaS CMS platform in the core business (e.g., Harmony + in-house LLM launch) and Base44 has potential drive growth and profitability medium to longer term, we believe the impairment particularly in the lower end of its core business and the heavy investment and uncertainty in Base44 will leave Wix below "Rule of 40"in the next several years. We await signs of stabilization in the core business and/or further improvement in Base44's unit economics before getting more positive on the Wix's financial outlook. With Q1 likely a bottom for EBIT margins (largely stable GM and OpEx dollars in Q2-Q4 without the Q1 Super Bowl spend), $1.6n dutch tender complete, and the stock trading at ~6x 2027E Adj. FCF, we see risk/reward relatively balanced at this level and maintain our Neutral rating."