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WIX Stock Surges 25.2% YTD: Will the Upward Trend Continue?
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Wix.com (WIX - Free Report) is witnessing healthy momentum this year so far. Shares of the company have gained 25.2% year to date compared with the S&P 500 composite’s growth of 19.7%.
Wix is a cloud-based web development platform that offers solutions enabling businesses, organizations, professionals and individuals to develop customized websites and application platforms.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #3 (Hold) stock.
The company’s performance is benefiting from solid momentum in the Creative Subscriptions’ and Business Solutions segments. Apart from this, continued momentum in annualized recurring revenues from Creative subscriptions is a major tailwind. In the last reported quarter, Creative subscriptions annualized recurring revenues were $1.18 billion, up 10% year over year.
Increasing partner revenues and B2B partnerships are tailwinds. The conversion of new users to paid subscriptions, strong customer retention and increasing average revenue per subscription augur well. At third-quarter end, registered users were 258 million.
The company plans to tap the growing demand for artificial intelligence (AI) by launching new products like Conversational AI Chat for businesses and AI Meta Tags Creator. These help users build their online business profile and enhance their website. Also, the company has launched other products like AI Site Generator and AI Assistant for businesses which leverage the power of AI to automate various aspects of the website creation process.
Going ahead, the company expects 2023 revenues and free cash flow margin to rise owing to business momentum. The management now anticipates 2023 revenues to grow 12-13% and in the range of $1,558-$1,563 million (earlier view: growth of 11-12% and in the range of $1,543-$1,558 million).
The company reported non-GAAP diluted earnings per share (EPS) of $1.10 for third-quarter 2023, exceeding the Zacks Consensus Estimate of 77 cents. The company had reported EPS of 6 cents in the year-ago quarter. Total revenues increased 14% year over year to $393.8 million and beat the Zacks Consensus Estimate of $389.5 million.
However, the volatile macroeconomic environment and unfavorable foreign currency fluctuations are likely to have acted as headwinds. Stiff competition and rising accumulated deficits are major headwinds.
A Look at Estimates
WIX’s EPS estimate for 2023 is pegged at $4.09. It incurred a loss of 17 cents per share in 2022. The Zacks Consensus Estimate for 2024 EPS is pegged at $4.43.
The Zacks Consensus Estimate for 2023 EPS has increased to $4.09 from $3.33 in the past 60 days, reflecting analysts’ optimism. The consensus estimate for 2024 EPS has improved to $4.43 from $3.53 over the same time frame.
The company’s revenues for 2023 are projected to rise 12.4% to $1.56 billion. For 2024, the metric is anticipated to climb 11.9% to $1.75 billion.
WIX outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 283.6%, on average.
The Zacks Consensus Estimate for Pegasystems’ 2023 EPS has improved 21.2% in the past 60 days to $1.77. PEGA delivered an average earnings surprise of 1,250.2% in the trailing four quarters. Shares of PEGA have jumped 45% in the past year.
The Zacks Consensus Estimate for Flex’s fiscal 2024 EPS has increased 3.6% in the past 60 days to $2.56. Flex’s long-term earnings growth rate is 12.4%.
Flex’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 11%. Shares of the company have risen 28.3% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 2.8% in the past 60 days to $8.00. Watts Water’s long-term earnings growth rate is 7.8%.
WTS’ earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 11.8%. Shares of WTS have rallied 28.9% in the past year.
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WIX Stock Surges 25.2% YTD: Will the Upward Trend Continue?
Wix.com (WIX - Free Report) is witnessing healthy momentum this year so far. Shares of the company have gained 25.2% year to date compared with the S&P 500 composite’s growth of 19.7%.
Wix is a cloud-based web development platform that offers solutions enabling businesses, organizations, professionals and individuals to develop customized websites and application platforms.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #3 (Hold) stock.
The company’s performance is benefiting from solid momentum in the Creative Subscriptions’ and Business Solutions segments. Apart from this, continued momentum in annualized recurring revenues from Creative subscriptions is a major tailwind. In the last reported quarter, Creative subscriptions annualized recurring revenues were $1.18 billion, up 10% year over year.
Increasing partner revenues and B2B partnerships are tailwinds. The conversion of new users to paid subscriptions, strong customer retention and increasing average revenue per subscription augur well. At third-quarter end, registered users were 258 million.
The company plans to tap the growing demand for artificial intelligence (AI) by launching new products like Conversational AI Chat for businesses and AI Meta Tags Creator. These help users build their online business profile and enhance their website. Also, the company has launched other products like AI Site Generator and AI Assistant for businesses which leverage the power of AI to automate various aspects of the website creation process.
Going ahead, the company expects 2023 revenues and free cash flow margin to rise owing to business momentum. The management now anticipates 2023 revenues to grow 12-13% and in the range of $1,558-$1,563 million (earlier view: growth of 11-12% and in the range of $1,543-$1,558 million).
The company reported non-GAAP diluted earnings per share (EPS) of $1.10 for third-quarter 2023, exceeding the Zacks Consensus Estimate of 77 cents. The company had reported EPS of 6 cents in the year-ago quarter. Total revenues increased 14% year over year to $393.8 million and beat the Zacks Consensus Estimate of $389.5 million.
However, the volatile macroeconomic environment and unfavorable foreign currency fluctuations are likely to have acted as headwinds. Stiff competition and rising accumulated deficits are major headwinds.
A Look at Estimates
WIX’s EPS estimate for 2023 is pegged at $4.09. It incurred a loss of 17 cents per share in 2022. The Zacks Consensus Estimate for 2024 EPS is pegged at $4.43.
The Zacks Consensus Estimate for 2023 EPS has increased to $4.09 from $3.33 in the past 60 days, reflecting analysts’ optimism. The consensus estimate for 2024 EPS has improved to $4.43 from $3.53 over the same time frame.
The company’s revenues for 2023 are projected to rise 12.4% to $1.56 billion. For 2024, the metric is anticipated to climb 11.9% to $1.75 billion.
WIX outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 283.6%, on average.
Stocks to Consider
Some better-ranked stocks in the broader technology space are Pegasystems (PEGA - Free Report) , Flex (FLEX - Free Report) and Watts Water Technologies (WTS - Free Report) . Pegasystems and Flex presently sport a Zacks Rank #1 (Strong Buy), whereas Watts Water Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Pegasystems’ 2023 EPS has improved 21.2% in the past 60 days to $1.77. PEGA delivered an average earnings surprise of 1,250.2% in the trailing four quarters. Shares of PEGA have jumped 45% in the past year.
The Zacks Consensus Estimate for Flex’s fiscal 2024 EPS has increased 3.6% in the past 60 days to $2.56. Flex’s long-term earnings growth rate is 12.4%.
Flex’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 11%. Shares of the company have risen 28.3% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 2.8% in the past 60 days to $8.00. Watts Water’s long-term earnings growth rate is 7.8%.
WTS’ earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 11.8%. Shares of WTS have rallied 28.9% in the past year.