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Investing.com - Citizens JMP downgraded Warby Parker Inc. (NYSE:WRBY) from Market Outperform to Market Perform on Thursday as analyst Andrew Boone transferred coverage of the eyewear retailer. The company, currently valued at $2.7 billion, has shown strong revenue growth of ~14% over the last twelve months.
The downgrade comes despite Citizens JMP’s positive view of Warby Parker’s value proposition, which offers designer quality glasses starting at $95, and its vertically integrated business model that provides cost advantages and distribution control. This model has enabled the company to maintain a healthy gross margin of 55.26% and a strong liquidity position with a current ratio of 2.7.
The firm acknowledged Warby Parker’s growth potential through new store openings and strategic partnerships, including its locations within Target (NYSE:TGT) stores, as well as opportunities to improve revenue per customer through its holistic care strategy.
Citizens JMP also highlighted Warby Parker’s efficient unit economics, noting that stores deliver 35% four-wall margins and 20-month payback periods, which points to potential margin expansion in the future.
However, the firm believes current consensus estimates already reflect Warby Parker’s store expansion plans, with projections for mid-teens year-over-year growth in the second half of 2025 and 2026, while also citing intense competition in the eyewear category and a reasonable current valuation at 21.7x 2026 estimated EBITDA.
In other recent news, Warby Parker Inc. has been the focus of several analyst updates following its partnership with Google (NASDAQ:GOOGL) to develop AI-powered smart glasses. Piper Sandler raised its price target for Warby Parker to $25, citing the partnership as a significant expansion of the company’s total addressable market, while maintaining an Overweight rating. This collaboration is expected to provide a substantial flow-through due to Google’s financial backing. Stifel also adjusted its outlook, increasing the price target to $21 and maintaining a Hold rating, noting the potential for Warby Parker to enhance its brand perception in the wearable technology market.
Loop Capital maintained a Buy rating with a $27 price target, expressing optimism about the partnership’s potential to boost Warby Parker’s EBITDA by a high single-digit percentage by 2027. TD Cowen reiterated its Buy rating and a $24 price target, emphasizing Warby Parker’s growing market share and consistent EBITDA margin expansion. The firm also highlighted the company’s achievement of GAAP profitability in the first quarter and its plans for significant store expansion.
Piper Sandler, in a separate note, maintained an Overweight rating with a $20 price target, projecting the partnership could contribute an incremental sales growth of 4-6% by 2025. Analysts across the board are closely watching how Warby Parker will monetize its recent ventures, including the integration of Versant and the reduction in China tariffs. As these developments unfold, Warby Parker’s financial performance and strategic initiatives will remain under scrutiny by the investment community.
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