Feb. 14--Wix.com Ltd. (Nasdaq: WIX), whose share price has climbed 80% since it was floated on Nasdaq last November, has got away from the analysts and left their price targets far behind. The financials that it released yesterday represented an opportunity for some of the analysts to update their models and raise their price targets. Oppenheimer, for example, lifted its target from $25 to $35, which represents a premium of 17% over the market price. Merrill Lynch has raised its price target for the second time in two months, this time from $30 to $32, giving a premium of 7%. Both Oppenheimer and Merrill Lynch were among the underwriters for Wix's IPO.
Wix, which is run by Avishai Abrahami, who was one of its founders, has developed a platform enabling people to set up Internet sites easily, mainly aimed at small businesses. Following the release of the financials, the share price was almost unchanged yesterday, and Wix's market cap stands at $1.1 billion. In 2013, its revenue grew 84%, to $80.5 million, and its loss deepened to $28.7 million.
Under the headline "When larger losses are a GOOD thing", Nat Schindler of Bank of America Merrill Lynch writes that the financial statements are positive. The company's guidance for 2014 is lower than in analysts' estimates it sees negative EBITDA of $40 million, which compares with estimates of $25.8 million. But Schindler points out that the aim is aim is higher R&D, sales and marketing spending to expand subscriber growth. "We are looking beyond the near term investment and see its benefits: Wix's 49% User growth and 68% Sub growth in 4Q were the highest in our Internet coverage cluster," Schindler writes, retaining a "Buy" recommendation.
Oppenheimer also gives a positive recommendation, "Outperform". Jason Helfstein point out that says the expected 2014 and 2015 collections growth is 51% and 38%, "putting WIX in an elite league of SaaS/Subscription-based growth companies, and one of the few companies successfully leveraging a 'freemium' business model."
(c)2014 Globes (Tel Aviv, Israel)
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