Buy this beat-down internet stock whose shares can rally more than 20%, Baird says

Baird upgraded Wix.com to outperform, citing an attractive entry point following a 27% year-to-date decline, while the S&P 500 slipped less than 1% in the same period. Analyst Vikram Kesavabhotla believes recent underperformance and more reasonable expectations after Q1 earnings alleviate concerns about meeting fiscal year 2025 guidance. Although the price target was trimmed to $190, it still implies a 22.6% upside from Thursday's close, driven by product enhancements and attractive long-term growth prospects.

Analysis

Baird has upgraded Wix.com to "outperform," with analyst Vikram Kesavabhotla identifying an attractive entry point following the stock's significant year-to-date decline of over 27%, a stark contrast to the S&P 500's less than 1% slip during the same period. Despite a $25 reduction in the price target to $190, this revised target still implies a substantial potential upside of 22.6% from Thursday's closing price. The upgrade is predicated on the view of Wix.com as a "high quality business" that continues to enhance its product offerings. Kesavabhotla's note to clients highlighted that expectations for the company have become "more reasonable" following its first-quarter earnings report, which also served to ease concerns regarding Wix.com's ability to meet its fiscal year 2025 guidance. Furthermore, the analyst pointed to several "attractive" long-term drivers for the investment case, an assessment that aligns with the majority of analysts polled by LSEG who also maintain a buy-equivalent rating on the stock.

Key Decisions for Investors

• Investors may consider the recent share price underperformance of Wix.com, down over 27% year-to-date, as a potential buying opportunity, supported by Baird's outperform rating and a $190 price target suggesting 22.6% upside.
• The easing of concerns around Wix.com's ability to meet its fiscal year 2025 guidance, coupled with ongoing product enhancements, presents a more favorable risk-reward profile according to Baird's analysis.
• Given the analyst's view on more reasonable expectations and attractive long-term drivers, investors should evaluate Wix.com's fundamentals and growth prospects, noting that this upgrade aligns with broader positive analyst sentiment.