On Friday, Jefferies brought some good news for Wayfair, the furniture and home goods retailer, as they upgraded their stock rating from hold to buy. In the same breath, they nudged up the target price by $2, setting it at $47. This bump suggests a promising 42% rally from Thursday’s closing price. Currently, Wayfair’s shares are trading at levels reminiscent of those early pandemic days in 2020. Despite this, Wayfair has grown about 30% larger and boasts an EBITDA increase of nearly 10%, according to analyst Jonathan Matuszewski.
Matuszewski is optimistic, citing several positive developments as reasons for this new outlook. “Top-tier market share gains, a fresh paid loyalty program, impressive B2B progress, and an underestimated push into physical retail all spell potential for EBITDA growth that could surpass expectations,” he explained. He feels confident that the market isn’t adequately valuing Wayfair’s consistent gains in market share, instead focusing too heavily on the slower growth of the industry as a whole.
Additionally, Matuszewski pointed out that the yearly rise in existing home sales hints at a recovering housing market in the U.S., which may stir demand for home goods—another point in Wayfair’s favor. Even if home sales slow, Wayfair’s new paid loyalty program is expected to contribute positively to EBITDA margins.
After Jefferies’ upgrade, Wayfair shares saw an uptick, climbing over 3% in premarket trading. Nonetheless, the stock is still down more than 25% for the year and has dropped 44.7% over the past 12 months.
Analysts appear to be divided on Wayfair’s stock. Data from LSEG indicates that out of 36 analysts, 16 are recommending a buy or strong buy, while the other 20 are advocating a hold.
