JPMorgan cuts Wayfair price target to $48, keeps Overweight rating

On Thursday, JPMorgan analyst Christopher Horvers adjusted the price target for Wayfair stock, listed on the New York Stock Exchange (NYSE:W), to $48.00 from the previous $50.00, while maintaining an Overweight rating on the company’s shares. Horvers cited the company’s performance, which surpassed expectations on key financial metrics, and a conservative outlook amid macroeconomic uncertainties. According to InvestingPro data, Wayfair currently generates annual revenue of $11.85 billion, though the company faces challenges with a negative EBITDA of $217 million. Analyst targets for the stock range widely from $25 to $100, reflecting the market’s mixed sentiment.

Wayfair’s recent financial results showed a stronger performance than anticipated in both revenue and earnings. Horvers pointed out that the company’s guidance appears cautious, particularly regarding sales and margin forecasts. This conservative stance seems to stem from the current macroeconomic environment. The analyst observed that Wayfair’s commentary on sales trends has improved since mid-February, with positive momentum carrying into March and beyond, despite acknowledging a potential headwind due to the leap day in February. InvestingPro analysis shows the company maintains a gross profit margin of 30.16%, though its overall Financial Health Score stands at FAIR, with particularly strong metrics in growth potential.

The analyst also mentioned that Wayfair seems to support the current second-quarter consensus estimates, which predict flat year-over-year sales and a 4.8% adjusted EBITDA rate. This, according to Horvers, might indicate that the company’s actual performance could be stronger than what they have projected. He believes that the market has not fully recognized Wayfair’s potential, considering the conservative estimates and the potential for margin improvements.

Horvers highlighted several factors that could contribute to Wayfair’s margin outlook, including the delayed benefits from inventory build-up by vendors in the company’s CastleGate network, the positive impact of the company’s exit from Germany, and reduced losses in international markets excluding a one-time Canadian duties settlement.

In conclusion, while acknowledging the uncertainties of demand pull-forward and broader recessionary risks, Horvers reaffirmed his Overweight rating. He expressed confidence that Wayfair’s stock is significantly undervalued at its current price level.

In other recent news, Wayfair Inc . reported a notable earnings beat for the first quarter of 2025, with earnings per share reaching $0.10, significantly surpassing the forecasted -$0.22. The company’s revenue was $2.73 billion, slightly above the expected $2.71 billion. Analysts from Mizuho (NYSE:MFG) Securities adjusted their outlook on Wayfair, reducing the price target to $50 from $60 but maintaining an Outperform rating due to the company’s strong financial results and potential for growth. Meanwhile, Stifel analysts raised their price target for Wayfair to $32 from $29, keeping a Hold rating, reflecting confidence in the company’s market strategy and logistics advantages.

Wayfair’s CFO, Kate Gulliver, highlighted strong second-quarter trends, although forecasting remains complex due to extended promotional events and potential consumer demand shifts. The company has been navigating the challenges of tariffs, with suppliers expected to absorb much of the cost, and sees current market conditions as an opportunity to capture greater market share. Wayfair’s U.S. business grew by 1.6% despite industry contraction, showcasing the company’s resilience and competitive positioning. The firm also reported an adjusted EBITDA of $106 million with a 3.9% margin, indicating operational efficiency.

Wayfair’s strategic focus on growth and efficiency is further supported by the engagement of more suppliers with its CastleGate logistics service, which is seen as a competitive advantage. The company’s decision to exit the German market and its ongoing efforts to optimize advertising expenditures are part of its broader strategy to enhance profitability and market presence. Looking ahead, Wayfair aims for stable margins and operating expenses, assuming flat revenue year-over-year, and remains committed to growing its adjusted EBITDA dollars and free cash flow throughout 2025.

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