Wayfair Inc. W shares are trading lower on Friday.
The company’s recently released second-quarter results show adjusted EPS and sales falling short of expectations amid cautious consumer spending and a challenging market.
The results came amid an exciting earnings season. Here are some key analyst takeaways.
RBC Capital Markets analyst Steven Shemesh reiterated the Sector Perform rating on the stock, lowering the price forecast to $53 from $65.
Shemesh trimmed estimates on the back of a more muted industry demand outlook and management’s decision to run the business at a slightly lower gross margin profile near-term.
For FY24/FY25, the analyst now models net sales of -2%/+3% (+1%/+6% prior) and adj. EBITDA of $505 million/ $635 million ($590 million/$727 million prior).
For FY24/FY25, the analyst now projects net sales to decrease by 2% and increase by 3%, compared to prior forecasts of 1% and 6% growth, respectively.
Adjusted EBITDA is estimated at $505 million for FY24 and $635 million for FY25, down from the previous estimates of $590 million and $727 million.
Goldman Sachs analyst Eric Sheridan reiterated the Neutral rating on Wayfair, reducing the price target from $67 to $54, mainly due to lower operating estimates.
On net, despite Wayfair continuing to display impressive execution and operating discipline, the analyst projects these results to disappoint investors as the combination of second-quarter revenue underperformance and lack of acceleration in the third quarter guide reduces the likelihood of upside scenarios into 2025.
For the third quarter, the revenue estimate has been revised to $2.9 billion from $3.1 billion.
For the full year 2024, revenue is now forecasted at $11.8 billion, down from $12.3 billion.
Piper Sandler analyst Peter J. Keith reiterated the Overweight rating on Wayfair, lowering the price forecast to $67 from $91.
Per Keith, Wayfair is leaning in on price investment in order to maintain its strong share capture rate.
Price investments invalidate the “$600M in EBITDA on flat sales” framework that was provided at the beginning of the year, the analyst writes.
All in, while the environment is a bit more challenging than Wayfair expected, the analyst writes that third quarter sales were guided conservatively after the second-quarter disappointment.
However, the analyst still looks to 2025 and beyond as potential for strong sales growth and margin expansion as industry trends improve while Wayfair continues to take share and manage costs prudently.
The analyst lowered the FY24 EPS estimate from $12.164 billion to $11.873 billion.
Check out other analyst stock ratings.
Wedbush analyst Seth Basham reiterated the Outperform rating on Wayfair, lowering the price forecast to $60 from $70.
Per Basham, Wayfair is effectively balancing costs and growth and its track record of consistent outperformance vs. the industry gives confidence that it’s making the right call by trading some margin for volume and market share.
The analyst adds that Wayfair’s share-winning formula should resonate even more as tailwinds from pricing actions build over the coming quarters and the macrocycle turns.
The analyst lowered the FY24 revenue estimate to $11.880 billion from $12.110 billion.
KeyBanc Capital Markets analyst Bradley B. Thomas reiterated the Sector Weight rating on Wayfair.
In 2H, gross margins are expected to be in the lower half of the 30%-31% range, primarily due to incremental price investments.
In spite of these investments, management remains confident that profitability improvements will remain due to cost actions taken in recent years.
Thomas lowered FY24 revenue estimate to $11.841 billion from $12.067 billion.
Truist Securities analyst Youssef Squali reiterated the Buy rating on Wayfair, lowering the price forecast to $60 from $70.
According to the analyst, while the stock lacks catalysts to move it higher near-term, its market share gains within the struggling Home Furnishing segment and meaningful cost efficiencies gained in the last 18 months (which are yielding higher profitability & margin leverage) as longer-term catalysts for when rates improve.
Price Action: W shares are trading lower by 2.69% to $48.69 at last check Friday.
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