Analyst Raises Wayfair's Price Target by 6.6% After Better-Than-Expected Q1 Results

RBC Capital's Steven Shemesh raised their price target on Wayfair (NYSE: W) by 6.6% from $61 to $65 on 2024/05/06. The analyst maintained their Hold rating on the stock.

Shemesh's price target hike was in response to Wayfair's Q1 2024 earnings report, released on 22024/05/02. The results showed some fluctuations in gross margin and restructuring charges, but overall, the analyst told investors that the quarter was better than expected.

Shemesh said that management should be acknowledged for its effective cost-control measures. In fact, the analyst plans to seek out signs of category progress to be able to take a more positive position on the company.

For Q1 2024, Wayfair reported a loss per share of $0.32, which beat the Zacks Consensus Estimate of $(0.45) and, by Q1 2023’s $(1.13). The company's revenue for the quarter was $2.73 billion, which beat the Zacks Consensus Estimate of $2.82 billion but missed Q1 2023’s $2.77 billion by 1.4%. Adjusted EBITDA for the quarter was $75 million.

Looking ahead, Wayfair's management guided for Q2 2024 with a gross margin of 30% to 31% and an adjusted EBITDA margin in the mid-single-digit range. Co-founder, Co-Chairman & CEO Niraj Shah expressed optimism about the company's performance, stating, "Our revenue was down just under 2% year-over-year for Q1, which marks our sixth straight quarter of market share gain."

Shah further highlighted positive trends, explaining, "Shoppers are increasingly choosing Wayfair, with year-over-year active customer growth once again positive and accelerating compared to last quarter." He also noted that suppliers are introducing large groups of new products into their catalogs, indicating momentum for future growth.

Despite Shemesh's price target increase and positive remarks about Wayfair's performance, the analyst maintained a Hold rating on the stock. According to WallStreetZen, Shemesh is ranked in the bottom 4% out of 4,575 Wall Street analysts, with an average return of -5.6% and a 43.2% win rate. Shemesh specializes in the Consumer Defensive, Energy, and Consumer Cyclical sectors.

As of now, 60% of top-rated analysts currently rate Wayfair as a Strong Buy or Buy, 40% see it as a Hold, and no analysts either recommend or strongly recommend selling the stock.

Since Wayfair's latest quarterly report on 2024/05/02, the stock price has increased by 16.7%. Year-over-year, the stock has risen by 71.2%. During that same period, Wayfair has outperformed the S&P 500, which has seen a gain of 25.2%.

Wayfair Incorporated, an e-commerce company headquartered in Boston, MA, sells furniture and home goods through five branded retail websites: Wayfair, Joss & Main, AllModern, Birch Lane, and Perigold. The company offers 14 million items from 11,000 global suppliers and was founded in 2002 under the name CSN Stores.

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