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Why Wix.com Stock Was Blasting Higher This Week
According to data compiled by S&P Global Market Intelligence, do-it-yourself website facilitator Wix.com (NASDAQ: WIX) was a notable outperformer across the past few days. Its week-to-date gain was nearly 11% as of early Friday morning, which topped many companies in the ever-popular tech sector. The company's boost was due to an analyst upgrade that touched on Wix's potential to gain from artificial intelligence (AI).
An underestimated company
That news hit the headlines on Monday before market open, setting the general bullish tone for Wix stock the rest of the week. The analyst in question was Morgan Stanley's Elizabeth Elliott, who up-shifted her recommendation on the shares to overweight (i.e., buy) from her previous equal weight (hold).
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She also raised her price target; it's now $276 per share, where formerly it was $248. This anticipates a potential gain of 14% on the most recent closing price.
Elliott's bullish new take on Wix is based on the company benefiting from innovation connected with AI, a rapidly burgeoning technology currently experiencing white-hot popularity among both developers and the public. The pundit also waxed bullish on what she considers to be the company's improved operational discipline.
Additionally, she said the market is underestimating Wix's ability to grow free cash flow (FCF), and this positive tendency is currently not priced into the stock to a meaningful degree.
Putting its money where its mouth is
Elliott makes several strong points about Wix's current state and its possible future. While it remains to be seen how much of that AI-fueled potential it can realize, the company has been doing well lately, showing good revenue growth and booking bottom-line profits. I think a bullish stance is entirely justified.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Wix.com. The Motley Fool has a disclosure policy.
