Wix.com's (WIX) prospects for durable growth, with increased operating discipline expanding margins and compounding free cash flow generation, has become harder to underwrite, Morgan Stanley said in a Tuesday research note.

A critical concern for the company is that growth is not inflecting despite Base44 strength, raising a more fundamental question around the health of the core website-building business, especially as its partners program sees a slowdown and the company has reduced its fiscal 2026 bookings and revenue expectations, Morgan Stanley said.

While Base44 is growing quickly, it is also extremely compute and intensive on sales and marketing expenses, ultimately weighing on FCF generation, Morgan Stanley said, adding that the market lacks conviction that vibe-coding tools are a durable, margin-accretive revenue stream.

"We expect concerns around potential website-building disruption and the compute, operating expense intensity of vibe-coding to remain an overhang on the multiple, keeping shares largely range-bound and underpinning a balanced risk-reward from here," according to the note.

Morgan Stanley lowered its rating on the company's stock to equal-weight from overweight and adjusted its price target to $60 from $112.

Price: 52.57, Change: -0.79, Percent Change: -1.48