What happened
Shares of website-building platform Wix.com (WIX +1.21%) got a boost on Tuesday after receiving a substantial upgrade from a prominent analyst. It likely also helped that a big rival received a downgrade. As of 10:45 a.m. ET, Wix stock is up about 6%.
So what
According to The Fly, Piper Sandler analyst Brent Bracelin upgraded Wix stock today to "overweight," which is a Wall Street way of saying Bracelin believes the stock will go up. Consequently, Bracelin reportedly raised his price target for Wix stock from $99 per share to $120 per share, suggesting about 27% more upside from where it trades as of this writing.
NASDAQ: WIX
Key Data Points
Wix's upgrade came as analyst Clarke Jeffries, also of Piper Sandler, downgraded Wix's rival GoDaddy. Jeffries reportedly dropped his price target for GoDaddy stock from $100 per share to $88 per share. Therefore, Piper Sandler clients are digesting this combination of news, which is likely creating some of the elevated demand for Wix stock today.
Now what
In the end, analysts' opinions are informed and can be helpful, but they are opinions nevertheless and don't predict the future. For Wix stock to hit Bracelin's target of $120 per share, sustain this price, and even achieve future market-beating gains, its business will need to perform better than it has lately.
Wix's growth slowed significantly in 2022, labor expenses increased as management increased its workforce to handle business that didn't materialize, and it's still spending on a pricey new headquarters. In 2023, it expects revenue to reaccelerate 9% to 11% year-over-year growth. And it expects profitability to improve. But it's still not targeting net income according to generally accepted accounting principles (GAAP) until 2025, which shows just how adjusted many of its metrics are.
Simply put, take Wix's projected progress in 2023 with a grain of salt -- it still has work to do. That said, the company is still retaining an impressive amount of customers and is marching ahead to its revenue goal of $2.5 billion in 2025, up from its revenue of $1.4 billion in 2022. So there is room for optimism as well.
