Mizuho cuts Wayfair stock price target to $50, maintains Outperform

On Thursday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Wayfair shares, reducing the price target to $50 from the previous $60, while continuing to endorse the stock with an Outperform rating. Currently trading at $31.23, the stock has declined nearly 32% year-to-date, according to InvestingPro data. The revision follows Wayfair’s first-quarter earnings report, which showcased revenue and profitability figures surpassing expectations.

Wayfair’s financial results indicated a modest increase in the top-line revenue, approximately 2% when accounting for the additional Leap Day and the company’s exit from the German market. With annual revenue reaching $11.85 billion and a gross margin of 30.16%, the company maintains a significant market presence despite recent challenges. Mizuho’s analysis of the quarterly performance included insights from Wayfair’s CFO, Kate Gulliver. She highlighted that second-quarter trends are looking "strong," although there are complexities in forecasting due to the extension of Way Day to five days and potential shifts in consumer demand.

Gulliver also addressed concerns regarding inventory levels, assuring that there is no immediate worry about product shortages in the second half of the year. Furthermore, while a precise timeline for reduced advertising expenditures was not provided, the management’s tone suggested a positive direction towards lowering these costs eventually.

Mizuho analysts believe that Wayfair’s margin potential is not fully appreciated, pointing to ongoing valuation disputes in Canada as a source of market confusion. InvestingPro’s analysis indicates the stock is fairly valued, with a Financial Health Score of "FAIR." Despite a challenging demand environment, Mizuho reaffirmed its Outperform rating, citing the company’s undervalued stock price as a key factor for maintaining a positive stance. The new price target of $50 reflects an adjustment to the forecast while still indicating a belief in the company’s potential for growth. For deeper insights into Wayfair’s valuation and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro.

In other recent news, Wayfair Inc (NYSE:W). reported a notable earnings beat for Q1 2025, with earnings per share reaching $0.10, surpassing the forecast of -$0.22. The company’s revenue also slightly exceeded expectations, totaling $2.73 billion compared to the anticipated $2.71 billion. This performance highlights Wayfair’s resilience in a challenging market, as it managed to grow its U.S. business by 1.6% despite industry contraction. Adjusted EBITDA for the quarter stood at $106 million, marking a 3.9% margin. Wayfair’s cash and liquidity positions remain strong, with $1.4 billion in cash and $1.8 billion in total liquidity. The company’s free cash flow improved by $60 million from Q1 2024, although it remained negative at -$139 million. Looking forward, Wayfair expects its Q2 gross margin to be between 30-31%, with advertising spend projected at 12-13%. Analyst firms, such as JPMorgan and Jefferies, have engaged with Wayfair on various topics, including tariffs and supplier strategies, emphasizing the company’s adaptability and competitive positioning.

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