Wayfair Receives Upgrade, Expects Strong Growth

UBS analysts have given Wayfair stock (ticker: W) a much-anticipated upgrade to Buy from Neutral. They also raised their price target to $110 from $72 in a report released on Sunday.

Positive Outlook for Wayfair

The upgrade comes with increased estimates for earnings per share, revenue, and earnings before interest, taxes, depreciation, and amortization. UBS analysts are confident that Wayfair is entering a promising phase that will bring both sales and profit acceleration.

Wayfair's Stock Performance

Following the upgrade, Wayfair stock experienced a modest 0.8% increase in Monday trading. The company's stock has already more than doubled this year, indicating strong market performance.

Improvements in Pricing and Availability

According to the analysts, Wayfair is expected to achieve robust revenue growth in the upcoming periods. This growth will be driven by the positive impacts of sharper pricing strategies and improved product availability. These decisions have already resulted in a rebound in customer base growth in the latest quarter, reversing a previous decline trend.

Wayfair Sees Strong Growth in Active Customers and Revenue

In its second-quarter earnings report, Wayfair exceeded expectations, with an active customer base of 21.8 million, slightly higher than the previous quarter. Although this figure is lower than the same period last year, analysts at UBS believe that Wayfair is on a sustainable growth trajectory, with increasing spending per customer leading to market-share gains.

Wayfair's Analyst Day, held on Thursday, is expected to be a significant event for the company, according to UBS analysts. The discussions will likely touch upon the sustainability of market-share growth, gross-margin targets, and investment discipline for the coming year. With these developments in mind, BofA analysts have upgraded Wayfair's stock rating to Buy with a price objective of $105.

Notably, Wells Fargo has also provided a double upgrade for Wayfair's stock, and several Wall Street firms have raised their price targets. Currently, the overall analyst sentiment for Wayfair is optimistic, with 49% rating the shares as Buy, 46% as Neutral, and only 5% as Sell, according to FactSet data.