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Investing.com - Morgan Stanley (NYSE:MS) raised its price target on Wayfair (NYSE:W) to $70.00 from $50.00 on Tuesday, while maintaining an Overweight rating on the online furniture retailer’s stock. The company, currently trading at $51.99 with a market capitalization of $6.67 billion, has shown strong momentum with a 15.4% return over the past six months.
The price target increase represents approximately 35% upside potential from Wayfair’s current share price. Morgan Stanley’s analysis indicates an asymmetric risk/reward profile skewed to the upside, with bull and bear scenarios suggesting roughly 92% upside and 42% downside, respectively. According to InvestingPro analysis, the stock appears overvalued at current levels, with additional insights available in the comprehensive Pro Research Report, which covers key metrics and expert analysis for informed investment decisions.
The new target price equates to approximately 0.85 times Morgan Stanley’s estimated 2026 sales of about $12.1 billion for Wayfair. This valuation represents a modest 15% discount compared to Wayfair’s long-term average EV/Sales multiple of 1.0x. The company currently generates $11.85 billion in revenue with a gross margin of 30.31%, though it faces some financial health challenges with a current ratio of 0.83.
Morgan Stanley cited the discount as necessary due to "limited visibility into the timing and quantum of an improvement in existing home sales/housing turnover." The 0.85x multiple marks an increase from the firm’s previous target multiple of 0.7x 2026 estimated EV/Sales.
The investment bank justified the higher multiple based on what it described as a "more benign trade policy, macroeconomic and category outlook" for the home furnishings retailer.
In other recent news, Wayfair has seen several developments concerning its financial outlook and strategic initiatives. Jefferies has raised its price target for Wayfair to $60, maintaining a Buy rating due to the company’s market share gains and a sales growth forecast exceeding consensus estimates. Piper Sandler also increased its price target to $61, citing improving demand in the home furnishings industry as a key factor. Meanwhile, TD Cowen initiated coverage with a Buy rating and a $51 price target, expressing optimism about Wayfair’s growth prospects based on favorable industry fundamentals.
Conversely, Loop Capital downgraded Wayfair from Hold to Sell, maintaining a $35 price target due to concerns over the uncertain tariff environment and potential inflation and supply issues. Mizuho (NYSE:MFG) reiterated its Outperform rating with a $50 price target, noting Wayfair’s new fulfillment initiative through its CastleGate logistics network. This initiative aims to provide services similar to those of Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT), although its impact on results may not be immediate. These recent developments reflect varied analyst perspectives on Wayfair’s future, with differing opinions on its stock performance and strategic direction.
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