Here's Why Investors May Consider Adding WIX to Their Portfolio

Wix.com Ltd WIX is one stock investors may want to keep an eye on in the current volatile market conditions, given its upside potential. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Record Inflation, a hawkish Fed policy, lingering global supply chain issues along with the Ukraine war and uncertainty prevailing over global macroeconomic conditions are roiling the U.S. and global equity markets.

In such a scenario, a stock like Wix, with sound growth opportunities, can be an attractive investment. WIX delivered an average earnings surprise of 26.4% in the trailing four quarters.

For 2022 and 2023, the company’s revenues estimates are pegged at $1.4 billion and $1.5 billion, suggesting year-over-year growth of 8.8% and 10.9%, respectively.

The Zacks Consensus Estimate for 2022 stands at a loss of $1.00 per share, having narrowed from a loss of $1.38 in the past 60 days. For 2023, the Zacks Consensus Estimate is pegged at 42 cents per share, improving from a loss of 19 cents in the past 60 days. For 2022 and 2023, the earnings estimates for the company suggest year-over-year growth of 28.1% and 142%, respectively.

Wix also has the favorable combination of a Growth Score of B and a Zacks Rank #2. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or #2 and a Growth Score of A or B offer solid investment opportunities.

Growth Drivers

Israel-based Wix provides solutions that enable businesses, organizations, professionals and individuals to develop customized websites and application platforms.

Wix’s performance is benefiting from continued momentum seen in annualized recurring revenues from Creative subscriptions along with robust uptake of Wix Payments and other new e-commerce applications.

The conversion of new users to paid subscriptions, strong customer retention, increasing average revenue per subscription and frequent product launches are tailwinds.

Wix recently launched its new Wix Portfolio solution, which enables professional users and students to customize and develop an online portfolio to showcase and grow their business. Wix Portfolio enables its customers to concentrate more on their vision instead of the web designing process. Customers can change their portfolio design with pre-designed layouts, add navigation buttons, change the font and add additional personalization to their portfolio without the need to update pages individually.

In July, the company announced its new Wix Editor, which integrates with the Wix Artificial Design Intelligence and the existing Wix Editor to provide users with simplified complex design capabilities. Customers can now leverage the improved design possibilities to turn their web creation visions into realities.

The company’s new cost reduction plan is expected to realize $150 million of annualized savings across the cost of revenue, operating expenses and capital expenditure.

Synergies from the recent acquisitions of Modalyst, Rise, ai and SpeedETab are aiding the top-line performance.

Exit from Russia, forex volatility and higher product development and marketing investments amid increasing competition from other cloud-based software and payment platforms are major concerns. The company focuses on small and medium-sized businesses that have been hit hard by the pandemic, which is an added headwind.

Other Stocks to Consider

Some other top-ranked stocks from the broader technology space are Synopsys SNPS, Pure Storage PSTG and Arista Networks ANET. Pure Storage and Arista Networks currently sport a Zacks Rank #1, whereas Synopsys carries a Zacks Rank #2.

The Zacks Consensus Estimate for Synopsys’ 2022 earnings is pegged at $8.85 per share, up 4.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 16.2%.

Synopsys’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 3%. Shares of SNPS have gained 6.3% in the past year.

The Zacks Consensus Estimate for PSTG’s 2022 earnings is pegged at $1.18 per share, rising 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.

Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have gained 11.9% in the past year.

The Zacks Consensus Estimate for Arista Network’s 2022 earnings is pegged at $4.04 per share, increasing 1.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 15.7%.

Arista Network’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have risen 23.2% in the past year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.