WIX - Wix.com rises as Piper Sandler upgrades after strong Q4 results

Wix.com ( NASDAQ: WIX ) shares rose fractionally in early trading on Thursday as investment firm Piper Sandler upgraded the web development company after it reported strong fourth-quarter results, citing higher subscription additions.

Analyst Clarke Jefferies raised his rating on Israeli-based Wix.com ( WIX ) to neutral from underweight, noting that subscription growth trends look to be on the right path, as they may have bottomed in the fourth-quarter, according to management.

"While we still have hesitations around the company's ability to fully reach its Rule of 40 by 2025 target (mostly on the growth side), we think the risk-reward for shares is more balanced than it has been for several quarters, with less ... risk for further downward revisions to 2023 & 2024 growth estimates," Jefferies wrote in a note to clients.

Jefferies added that higher cumulative bookings were driven by a 29% increase in average revenue per subscriber, compared to 2019.

He also pointed out that even though creative annual recurring revenue is still moderating, there is the increased likelihood of a trough in the high-single digit growth range.

"We continue to have caution around the trendline in this metric, but the company's user cohort commentary indicates to us that gross trends could be much healthier than the reported," Jefferies posited.

Last week, investment firm Credit Suisse started coverage on Wix.com ( WIX ) with an outperform rating, citing the fact it has a number of other areas where it can see growth, including the intersection of software and payments .

Analysts are largely bullish on Wix.com ( WIX ). It has a BUY rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates WIX a HOLD .

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