Citi cuts Warby Parker price target to $17, upgrades to Neutral

On Wednesday, Warby Parker Inc. (NYSE:WRBY) experienced a change in its stock outlook as Citi analyst Paul Lejuez adjusted the company’s price target to $17.00, a decrease from the previous target of $23.00. In conjunction with this change, the analyst upgraded Warby Parker’s stock rating to Neutral from Sell. The adjustment reflects a shift in perspective following a significant drop in the company’s share value. According to InvestingPro data, the stock has declined nearly 35% year-to-date, with analyst targets now ranging from $16 to $30.

Lejuez noted that Warby Parker’s shares have fallen 41% since February 5, indicating that the market may have already accounted for the immediate tariff pressures the company is facing. Warby Parker, known for selling eyewear that is often medically necessary, operates optical labs in the United States. However, the company sources approximately 20% of its cost of goods sold (COGS) from China, specifically for frames. InvestingPro data shows the company maintains strong financial flexibility with a healthy current ratio of 2.5 and more cash than debt on its balance sheet.

The analyst pointed out that Warby Parker will need to navigate the challenges posed by tariffs by altering frame sourcing strategies and potentially adjusting prices. These efforts are expected to be crucial for the company’s performance throughout the fiscal year 2025. Lejuez suggested that these changes could lead to margin pressures and fluctuations in financial results in the short term.

According to Lejuez, the market has now reached a more balanced risk/reward scenario for Warby Parker’s stock. This is partly due to the stock trading at 14.3 times the firm’s estimated fiscal year 2026 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). The analyst also hinted at a slight positive lean towards the stock given its current valuation. InvestingPro analysis reveals the company’s robust revenue growth of 15.2% in the last twelve months, with analysts expecting continued profitability improvement. For deeper insights into Warby Parker’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, which provides detailed analysis of the company’s financial health and market position.

Warby Parker’s next steps will involve strategic decisions to mitigate the impact of tariffs, which will be closely watched by investors as the company aims to stabilize its financial standing in the face of these economic headwinds. With a gross profit margin of 55.3% and anticipated earnings growth, the company appears positioned to navigate these challenges. Investors can access additional insights and 12 more exclusive ProTips about Warby Parker through the comprehensive analysis available on InvestingPro.

In other recent news, Warby Parker Inc. announced a 17.8% increase in fourth-quarter 2024 revenue, reaching $190.6 million, surpassing both Stifel’s projection of $185.7 million and the consensus estimate of $187.6 million. The company also provided a positive revenue outlook for fiscal year 2025, with expectations set between $878 million and $893 million, indicating a 14% to 16% growth year-over-year. Analysts at Stifel raised their price target for Warby Parker to $25, while maintaining a Hold rating. Similarly, UBS increased its price target to $23, retaining a Neutral stance, citing Warby Parker’s growth in eCommerce sales and an expanding customer base.

JMP Securities also raised Warby Parker’s price target to $30, maintaining a Market Outperform rating, following the company’s strong fourth-quarter results and new partnership with Target (NYSE:TGT). This collaboration is expected to boost Warby Parker’s active customer base due to Target’s extensive reach. Loop Capital upgraded Warby Parker’s stock rating from Hold to Buy, maintaining a price target of $27, based on the company’s robust demand trends and advantageous market position. TD Cowen analysts identified Warby Parker as a growth pick during market pullbacks, maintaining a Buy rating.

Despite the positive trajectory, analysts have noted challenges such as potential tariff headwinds and a challenging macroeconomic environment. However, Warby Parker’s strategic partnerships and market strategies are seen as potential drivers for future growth and market share expansion.

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