Wayfair To Enter A Multi-Quarter Growth Period, Analyst Upgrades Stock

UBS analyst Atul Maheswari upgraded Wayfair Inc W to Buy from Neutral with an increased price target of $110 from $72.

The analyst believes the company will enter a multi-quarter duration where it will witness a boost in both sales and profit, and the market will be surprised by the 'degree of profit upside.'

Maheshwari projects revenue growth in mid-single-digits to high-single-digits in the coming periods on continued benefits from sharper pricing and improved availability. 

The analyst notes customer growth in Q2, following a decline in several quarters, which, coupled with higher spending per customer, can boost revenues.

Also, the analyst believes the company's move to reduce the cost base should drive margin gains in the future. 

Maheswari raised the 2024 & 2025 EBITDA margin estimates to 3.9% and 5.0% (above cons. of 3.2% and 4.4%, respectively).

The analyst expects the estimates to move higher post its upcoming Analyst Day. 

Last week, W reported a second-quarter FY23 sales decline of 3.4% year-on-year to $3.17 billion, beating the consensus of $3.10 billion. Adjusted EPS of $0.21 beat the analyst consensus of $(0.67). 

Price Action: W shares are trading lower by 0.11% at $83.00 on the last check Monday.