On Tuesday, Piper Sandler reaffirmed its positive stance on Wayfair shares (NYSE:W), maintaining an Overweight rating and a $58.00 price target. The firm's analysts highlighted the potential for revenue upside in the fourth quarter (Q4), suggesting a strong risk/reward scenario ahead of the company's earnings report, scheduled for February 20.
Currently trading at $44.99, InvestingPro analysis suggests Wayfair is slightly undervalued, with analyst targets ranging from $40 to $100 per share.
Wayfair, known for its online home goods and furniture offerings, has been subject to analyst scrutiny as expectations for Q4 revenue hover around a 1% to 2% year-over-year decline. However, Piper Sandler sees a chance for better-than-anticipated performance.
The optimism is based on industry-wide sales improvements post the November 5th election, as indicated by the firm's Q4 Furniture survey and discussions with Wayfair suppliers and other furniture and mattress retailers. InvestingPro data shows the company's trailing twelve-month revenue stands at $11.84 billion, with a current market capitalization of $5.64 billion.
The current market consensus for Wayfair's Q4 sales reflects a cautious outlook, seemingly disregarding any sales trend improvement from October or even the first three quarters of 2024. Despite these conservative estimates, Piper Sandler has set a Street-high Q4 sales estimate for Wayfair at 0% year-over-year growth, countering the general expectation of a decline.
The analysts also anticipate that Wayfair will continue to see revenue growth into the first quarter (Q1) of 2025, contrasting with the consensus sales forecast, which also stands at 0% year-over-year. This projection is based on various data points suggesting that the fourth quarter of 2024 experienced the strongest industry growth of the year and potentially in several years.
InvestingPro subscribers can access additional insights through comprehensive Pro Research Reports, which reveal that while the company's overall financial health score is currently rated as weak, analysts predict profitability this year with an EPS forecast of $0.43.
Piper Sandler's reiteration of the Overweight rating and price target comes as Wayfair prepares to release its Q4 earnings, which are closely watched by investors for signs of the company's financial health and future prospects in the competitive e-commerce space.
In other recent news, Wayfair has decided to cease operations in Germany, affecting approximately 730 jobs. This move is part of a broader restructuring plan that aims to redirect cost savings into core domestic operations. The company anticipates charges between $102 million and $111 million related to this restructuring.
Mizuho (NYSE:MFG) Securities maintains an Outperform rating on Wayfair, while BofA Securities has increased its price target for the company to $51, maintaining a Neutral rating. Loop Capital also raised the share price target for Wayfair from $50 to $55, maintaining a hold rating. These are recent developments that could impact investor decisions.
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