Finding Limited Room For Upside, Cantor Goes Neutral On Wix.com

“While we continue to like Wix.Com Ltd (NASDAQ: WIX)'s differentiated offering and believe that underlying fundamentals remain strong, we find limited room for upside in the stock, which is up 70+ percent YTD,” Cantor Fitzgerald’s Naved Khan said in a note.

The analyst downgraded the rating on the company from Overweight to Neutral, while raising the price target from $65 to $80.

Robust Growth Outlook

Mentioning that the risk/reward was balanced at present, Khan added that Wix is expected to continue to see strong subscriber growth in both its premium and free offerings. However, at its current levels, the stock already reflects the growth expectations over the near and medium terms.

“Commentary from mgt. at investor conferences in Feb. as well as independent third-party data suggest Wix’s underlying business fundamentals remain solid, which should contribute to healthy growth in subscribers, in our view,” the analyst went on to say.

Estimates Revised

Khan expects the company’s premium subscriber to grow 40 percent in the first quarter and 35 percent year-on-year in 2017.

The revenue, adjusted EBITDA and free cash flow estimates for 2017 have been revised to reflect the impact of the recent DeviantArt acquisition, along with continued robust organic growth in the business.

The analyst expects DeviantArt to contribute $8 million and $9 million to revenue and collections, respectively, while lowering free cash flow by $8 million.

“We have also tweaked upward our top line growth assumptions for the outer years to reflect slightly faster growth in premium subs and ARPU,” Khan added.

At last check, shares of Wix were down 1.97 percent at $74.80.

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