Barclays Upgrades Wayfair, Lifts PT After 2Q Sales Beat


Barclays upgraded Wayfair to Hold from Sell after the online furniture store exceeded analysts’ expectations for second-quarter revenue driven by increased demand for its e-commerce products during the coronavirus pandemic.

Wayfair (W) posted earnings of $3.13 per share in the second quarter topping Street estimates for $1.04 per share. Total revenue rose 84% to $4.3 billion in the reported quarter year-on-year, beating the $4.06 billion forecast by analysts.

Barclays’ Tennant raised the stock’s price target to $321 (6.5% upside potential) from $153. In a research note, the analyst said said that “Wayfair’s model includes continued sales acceleration, visibility on a sustained path to profitability, and “materially improved” cash flow resulting from COVID-19-driven trends in home.”

Meanwhile, Oppenheimer analyst Brian Nagel maintained a Buy rating and lifted his price target to $395 (31.1% upside potential) from $200. He stated that his “continued positive call on Wayfair is generally longer term in nature and considers potential nearer-term volatility in shares.”

Piper Sandler analyst Peter Keith, who increased the price target to $370 (22.8% upside potential) from $275, believes that Wayfair’s “long-term EBITDA margin target of 8%-10% now looks conservative.” Keith maintained a Buy rating.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 11 Buys, 9 Holds, and 3 Sells. Following Wayfair’s 234% stock rally year-to-date, the average price target of $261.59 implies downside potential of 13%. (See W stock analysis on TipRanks).

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