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Investing.com - Mizuho (NYSE:MFG) raised its price target on Wayfair (NYSE:W) to $88.00 from $50.00 on Monday, maintaining an Outperform rating following the company’s strong second-quarter performance. According to InvestingPro data, the stock is trading near its 52-week high of $73.79, with analyst targets ranging from $25 to $100.
The online furniture retailer delivered what Mizuho described as "very clean Q2 results," with domestic EBITDA dollars increasing more than 12% on mid-single-digit revenue growth. U.S. EBITDA margins approached 8%, indicating improved profitability in the company’s core market. While InvestingPro data shows the company is not yet profitable on a trailing twelve-month basis, analysts forecast positive earnings for 2025.
Mizuho noted emerging signals of bottoming demand in the home furnishings sector, with Wayfair’s management reporting improvements in direct traffic, partly aided by generative AI platforms directing consumers to the company’s platform.
The firm highlighted that Wayfair’s current advertising intensity of 11-12% appears sustainable, with the company making strategic cutbacks on lower ROI spending while maintaining effective customer acquisition.
Mizuho also pointed to Wayfair’s announcement of non-Wayfair order fulfillment through its CastleGate logistics network as a potential new margin driver, describing the stock as a "high-torque name worth owning" despite its approximately 60% year-to-date price increase compared to the S&P 500’s 8% gain.
In other recent news, Wayfair has reported strong second-quarter results, with both revenues and EBITDA surpassing expectations. This performance has led several analysts to adjust their price targets for the company. Stifel raised its price target to $68, noting the continuation of healthy growth into the current quarter. Jefferies increased its target to $74, highlighting market share gains and a potential increase in customer spending frequency. Needham more than doubled its target to $83, attributing this to improved execution, accelerated revenue growth, and better margins due to reduced advertising expenses. BofA Securities set its target at $72, emphasizing the growth in Wayfair’s CastleGate logistics, which is expected to enhance market share through improved delivery and customer experience. Additionally, William Blair reiterated an Outperform rating, citing potential valuation expansion and balance sheet improvements as factors supporting Wayfair’s stock. These developments reflect a positive outlook from analysts based on the company’s recent performance and strategic initiatives.
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