WIX

We rate Wix.com Ltd. (WIX) as a Reduce with a composite score of 47.7/100 at a current price of $65.09. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (69th percentile) and value (62th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (14th percentile) and investment (41th percentile) tempers our overall conviction. We assign a Narrow Moat rating (68/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Wix.com Ltd. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 47.7/100 places it at rank #2379 in our full 7,333-stock universe. With a $12.1B market capitalization, Wix.com Ltd. operates at meaningful scale within the Services sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 13%, though momentum at the 14th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 68% (+8.4pp vs sector) narrow to operating margins of 6% (+2.2pp vs sector) and net margins of 7.9%, yielding a gross-to-net conversion rate of 12%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $65.09, Wix.com Ltd. is trading near fair value based on current fundamentals. Our value factor score of 62/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 25.2x (roughly in line with the sector median of 23.7x), EV/EBITDA of 5.7x (discounted to peers), P/S of 0.5x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Medium uncertainty rating to Wix.com Ltd.. The stock presents a balanced risk profile: risk factors are within normal ranges. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

We identify no major risk factors at this time. The company's stability factor sits at the 51th percentile with quality at the 69th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 68% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Wix.com Ltd.'s capital allocation as Poor. Key concerns include low returns on equity (-207.6%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Wix.com Ltd. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Wix.com Ltd. receives a Reduce rating with a composite score of 47.7/100 (rank #2379 of 7,333). Our quantitative framework assigns a Narrow Moat (68/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 47/100.

Our analysis does not support a constructive view on Wix.com Ltd. at this time. The combination of the current quantitative profile, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.