Analyst Sees Over 50% Upside in Wix.com

By Chris Lange Published Aug 6, 4:00PM EDT

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Wix.com Ltd. (NASDAQ: WIX) posted another solid earnings report, reporting second quarter results and raising its 2014 revenue outlook on strong growth in new subscribers. The move is enough that Bank of America Merrill Lynch has maintained its Buy rating, and its $27 price target.

The Internet and e-Commerce team report was by Nat Schindler and Ryan Gee, and if they are correct then Wix can rally over 50% from current levels. They even called Wix a hyper-growth story.

The team called Wix.com as still being one of the fastest growing companies in their internet coverage. Its subscribers increased by 63% in the second quarter, and collections and revenues were higher than expected by Bank of America and the street.

Wix.com is seeing some of the fastest subscriber growth in internet coverage with second quarter subscribers up 63%. Wix is leading overall internet growth in subscribers – far ahead of Angie’s List, Care.com, and Chegg.

Bank of America estimates 60% in subscriber growth in the third quarter and 57% in the fourth. They also expect that Wix will benefit from a broader global reach, superior content, product enhancements, more local content, new international payment options, and vertical specific content.

The Merrill Lynch team also raised the expectations for the 2014 revenue and collections to $165 million and $132 million from $160 million and $132 million, respectively. EBITDA remains slightly lower. The analysts also said that Wix has the predictability and stability of a SaaS (Software as a Service) company and warrants a premium to the average ecommerce or subscription service company growth due to its strong growth.

Wix.com has traded down from its post-IPO peak. In fact, the current price compares to a post-IPO range of $14.28 to $32.69. As far as how the $27 price target compares to elsewhere, the consensus price target is even higher – up above $31!

Investors should be aware that Wix is based in Israel and has a $660 million market cap. The company is still losing money on adjusted earnings per share, and is expected by Thomson Reuters to post a loss at -$1.08 EPS for 2014 and a loss at -$0.36 EPS in 2015.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.