What happened
Shares of web-presence company Wix.com (WIX 0.11%) popped on Thursday, bucking the market's downward trend, thanks to an upgrade from an analyst. As of 1:45 p.m. ET, Wix stock was up about 5%.
So what
As of this writing, the S&P 500 is down 24% from its all-time high, and Wix stock is down 77% from its high. Upgrades during down times are relatively rare, which is why today's upgrade from Oppenheimer analyst Ken Wong comes as somewhat of a surprise. According to The Fly, Wong says Wix is a stock worth buying. And he gave it a price target of $110 per share, implying more than 40% upside from where it traded at the close of the market yesterday.
Wix's stock also popped earlier this month when activist investor-firm Starboard disclosed it had purchased a 9% stake in the company. And Wong sees this involvement from Starboard as a reason to buy Wix stock today.
Now what
Wong says that "streamlined efforts" can help Wix create shareholder value, and Starboard's involvement will keep it focused on that task. And to that point, Wix's management is getting more disciplined in its spending as it moves toward its goal of $500 million in annual free cash flow (FCF) in 2025.
Considering Wix's market cap is $4.6 billion as of this writing, $500 in FCF could make Wix stock a bargain, and it's likely why Wall Street is warming up to this investment. However, nothing is guaranteed, and shareholders would do well to remember that the company's FCF is negative right now, so it's climbing a steep hill in coming years.
