Credit Suisse Boosts Wayfair's Price Target After Sell-Off

Wayfair Inc W's earnings report Thursday sent shares plunging, but at least one Wall Street analyst found the print convincing enough to warrant an increase in the stock's price target.

The Analyst

Credit Suisse's Paul Bieber maintains a Neutral rating on Wayfair's stock with a price target boosted from $69 to $76.

The Thesis

Wayfair's earnings showed that its trends during the fourth quarter were strong as evidenced by a Direct Retail revenue growth of 43 percent, Bieber said in a note. But the momentum failed to translate to the EBITDA line. The company will continue investing in its business across multiple areas, including last mile delivery, headcount, and international which implies an "uncertain" EBITDA outlook for 2018 and 2019.

The furniture company's investments bodes well for the longer term, according to Beiber, as it's looking to create a "stronger" e-commerce platform. In the meantime, the company could see $6 billion in revenue in 2018 and still post an EBITDA loss, which warrants a neutral stance on the stock.

The analyst's revised $76 price target is based on a 0.9 times multiple on 2019E EV/Sales, which is a "modest" premium versus the retail group that trades a 0.8x multiple.

Price Action

Shares of Wayfair lost 22 percent Thursday and were lower by another 4.6 percent Friday at $70.52.

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