By Chibuike Oguh
NEW YORK (Reuters) - Shares of Wayfair (NYSE:W) Inc rose as much as 24% on Thursday to their highest level in more than a year, after the online furniture retailer reported a smaller-than-expected second-quarter loss as orders grew and costs fell.
While net revenue fell 3.4% year on year to $3.2 billion, Wayfair delivered more than 10 million orders, up 3% from the year-ago quarter.
The cost of merchandise sold fell 8.4% to $2.2 billion, allowing gross profit to rise by nearly 10% and net loss to narrow to $46 million. Analysts had expected a net loss of $74 million, Refinitiv data showed.
Wayfair's shares topped out at $90.71, the highest since May 2022. The stock, which has risen 160% year-to-date, was last up 19% at $87.04.
"The second quarter saw gross margins exceed 30%, a milestone we've only previously accomplished during the peak pandemic period of 2020," Wayfair Chief Executive Niraj Shah told an analyst conference call on Thursday.
Wells Fargo (NYSE:WFC) analysts, led by Zachary Fadem, upgraded Wayfair's stock to "overweight" from "underweight" and raised their price target to $100 per share from $35, citing the company's "leaner, more productive business" with lower product costs and a stronger-than-expected sales recovery.
"We believe it's time to re-recognize Wayfair as a high growth, share-taking asset with real profit levers and upside catalysts," the analysts wrote in an investor note.
The median price target for Wayfair's stock from 38 analysts is $70 per share with an average rating of "buy," Refinitiv data showed.