WIX share price up 38% in one year: will the rally continue?

vix.comWIX’s performance was driven by continued growth momentum across all market segments and the launch of innovative products.

Headquartered in Tel Aviv, Israel, WIX was founded in 2006 and is a cloud-based web development platform. It provides solutions that enable businesses, organizations, professionals and individuals to develop customized websites and application platforms and expand their online presence.

Solid financial performance also led to good operations on the trading side. The stock continued its upward trend, rising 37.8% compared with the S&P Composite Index’s gain of 24.9%.

With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment choice right now.

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In addition to its favorable ranking, WIX has a VGM score of B. Stocks with a Zacks Rank #1 (Strong Buy) or 2 and a VGM Score of A or B offer solid investment opportunities based on Zacks’ proprietary methodology.

WIX has topped estimates in each of the past four quarters, with average profit beating estimates by 124.1%.

The Zacks Consensus Estimate for WIX’s 2024 and 2025 earnings per share is $4.80 and $6.50, which would represent gains of 9.3% and 35.4%, respectively, from a year ago. Over the past 60 days, the Zacks Consensus Estimate for fiscal 2024 and fiscal 2025 earnings has improved by 2.8% and 6%, respectively.

The long-term profit growth rate is estimated to be 25%.

Revenue in 2024 and 2025 is expected to grow 13.9% and 11.2%, respectively, to US$1.78 billion and US$1.98 billion.

factors driving growth

Momentum in the creative subscriptions and commerce solutions segments is driving top-line results. Frequent product launches, growth in the number of registered users and paid subscriptions are key drivers.

Creative subscription revenue (73.3% of total revenue) increased 12% year over year to $296.2 million last quarter. Revenue at Business Solutions (26.7%) grew 20% to $107.6 million.

The story continues

The company plans to meet the growing demand for artificial intelligence (AI) by launching innovative products such as AI site builder, AI chat experience for enterprises, and AI code assistant.

Healthy adoption of Wix Studio will likely drive overall monetization among the partner base. Average revenue per subscription was driven by a shift to higher-tier packages, higher pricing, and increased adoption and use of business solutions products.

Looking ahead, WIX expects bookings and revenue in 2024 to benefit from a stable and positive trending macro environment and strong business momentum.

The company expects revenue to grow 11-13% in 2024, ranging from $173-1.76 billion.

Management estimates free cash flow (excluding headquarters capex) to be in the range of $370-400 million, or 21-23% of revenue.

Revenue for the first quarter of 2024 is expected to be in the range of $415 million to $419 million, an increase of 11-12% from the number reported in the prior year period. The Zacks Consensus Estimate is for $417.7 million, up 11.7% from the year-ago quarter.

Headwinds continue

However, adverse foreign exchange trends and rising cumulative deficits are headwinds.

Increased investment in product development, infrastructure and platforms, as well as fierce competition, remain concerns.

Other stocks worth considering

Some other top stocks worth considering in the broader technology sector are Synopsys SNPS, Iridium Communications IRDM and Microsoft Microsoft Financial Times. While SNPS and IRDM each have a Zacks Rank #1, MSFT currently has a Zacks Rank of #2.you can see The complete list of today’s Zacks #1 Rank stocks is here.

The Zacks Consensus Estimate for SNPS’s fiscal 2024 earnings per share is $13.36. The long-term profit growth rate is 17.5%. SNPS’ earnings have topped the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 4.1%. Last year, SNPS shares soared 46.5%.

The Zacks Consensus Estimate for IRDM’s 2024 earnings per share has increased 148.3% over the past 60 days to 72 cents. Iridium’s earnings have topped the Zacks Consensus Estimate in two of the last four quarters and missed estimates twice. The average profit surprise rate is 91.7%.

The Zacks Consensus Estimate for Microsoft’s fiscal 2024 earnings per share is $11.63, which would represent an increase of 18.6% from the year-ago period. MSFT’s earnings have topped the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 8.8%. The long-term profit growth rate is 16.2%. MSFT’s stock price rose 46.7% last year.

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