By Senad Karaahmetovic

Morgan Stanley Analyst Elizabeth Porter upgraded shares of Wix.com to Overweight from Equal Weight with an $85.00 target share price.

The company’s shares are suffering from the current macro environment that is shaped by the tightening financial conditions. In such an environment, investors are “unlikely to give credit to a show-me story,” argues Porter.

“We continue to believe Wix has a best-in-class product benefiting from fast-paced innovation, however we are moving to an Equal-weight rating (from Overweight) as 1) a COVID pull-forward in demand and increasing FX headwinds pressure FY22 forecasts and 2) benefits from improving profitability skew to FY23 and beyond. In the current market environment, investors are unlikely to give credit to a show-me story for improving medium to long-term metrics while near-term proves to be a period of recovery,” Porter said in a client note.

The analyst made a move after attending the company’s Investor Day, which she described as “encouraging.”

“We continue to believe management’s focus of profitability is a step in the right direction and increase our long-term DCF forecast in-line with guidance, but reduce our implied multiple to reflect a show-me story and discount to software and internet peers. We see the potential for a multiple re-rating when the inflection in growth and profitability becomes evident, which we see as a mid FY23 catalyst,” Porter added.

Net-net, the Morgan Stanley analyst still likes Wix.com but says that a revenue recovery will take more time.

Wix shares were down by 1% on Friday, pre-open.