Why E-Commerce Is The No. 1 Stay-At-Home Theme

Morgan Stanley previewed the rising e-commerce trend as shelter-in-place arrangements continue in many states across the country.

Analyst Brian Nowak raised e-commerce estimates for Amazon AMZN, eBay EBAY and Etsy ETSY and previewed second-quarter earnings for Chewy
CHWY, Wayfair W, Revolve Group RVLV, and Casper Sleep CSPR.

The analyst named the following as macro e-commerce themes to watch into earnings season and fiscal year 2021:

• Detail on buyers
• Retention strategies
• How do companies think about growth in FY21?
• How are customer acquisition channels changing?
• Is e-commerce becoming more direct?
• How is social media fitting in?

AMZN: Nowak is bullish on Amazon and called it a top pick. He maintained a price target of $3,450.

EBAY: Nowak raised the eBay price target from $52 to $62 given positive trends. "Buyer retention (and GMV growth) into ’21 is likely to be key to continuing to drive outperformance," the analyst said. 

CHWY: "We continue to believe CHWY is best positioned to retain new customers acquired during COVID," he said. 

ETSY: Nowak raised Q2 GMS growth estimates to 150%, the price target from $43 to $65 and reiterated an Underweight rating on the stock.

W: Nowak expects W’s second-quarter results to “significantly beat forecasts.” Wayfair could deliver approximately 90% revenue growth in the second quarter, the analyst said, adding that strong sales trends have spilled over into July.

CSPR: “We expect top-line to be relatively in-line with expectations, with slightly better eCommerce growth likely offset by longer store closures in select states and store based wholesale partner pressure.”

RVLV: Given the reinstatement of stay-at-home measures in California, Texas, and Florida, there is incremental risk to Revolve’s forecasts for the rest of the year, according to Morgan Stanley.