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On Wednesday, Stifel analysts adjusted their outlook on Warby Parker Inc. (NYSE:WRBY), increasing the company’s price target from $18.00 to $21.00 while maintaining a Hold rating on the stock. Currently trading at $20.34, the company has shown significant momentum with a 16.36% gain in the past week. The revision follows Warby Parker’s announcement of a partnership with Google (NASDAQ:GOOGL)’s Android XR, marking the company’s foray into the wearable technology market. According to InvestingPro analysis, the stock is currently trading above its Fair Value.
The analysts believe that Warby Parker’s established reputation for aesthetic and fashion-forward designs will complement the technological advancements of Google’s A.I. technology. With a market capitalization of $2.47 billion and impressive revenue growth of ~14% over the last twelve months, this collaboration is seen as a move that could potentially enhance Warby Parker’s brand perception as an innovator and solidify its position in the technology sphere.
The partnership is expected to expose Warby Parker to the rapidly expanding wearables segment and provide Google with a more promising entry into the mainstream smart glasses market. The discontinued Google Glass project lacked the fashionable appeal that Warby Parker can now offer.
Stifel’s analysts project that the partnership will increase Warby Parker’s total addressable market (TAM) once the products are commercialized, which is anticipated to be beyond 2025. They suggest that with the support of a credible partner like Google, Warby Parker warrants a premium multiple. The new price target of $21 reflects a 21.6 times multiple of the firm’s fiscal year 2026 adjusted EBITDA estimate.
The analysts concluded their note by expressing a cautious stance, opting to maintain a Hold rating due to the execution risks associated with the new venture. They emphasized the importance of observing Warby Parker’s progress in integrating Google’s technology and navigating the wearable tech market before making further recommendations. InvestingPro data reveals analyst price targets ranging from $16 to $27, with the company maintaining a FAIR financial health score. Discover 12 additional exclusive ProTips and comprehensive analysis in the Pro Research Report.
In other recent news, Warby Parker Inc. announced a strategic partnership with Google to develop AI-powered eyewear, marking a significant advancement in the wearable technology sector. The collaboration involves a substantial commitment from Google, which has pledged up to $150 million for product development, commercialization, and potential equity investment, contingent on achieving certain milestones. Warby Parker’s co-CEOs emphasized the potential of the AI glasses to enhance user experience, with the initial product line expected to launch post-2025. This partnership has prompted Citi to raise Warby Parker’s price target from $17 to $22, while maintaining a Neutral rating, reflecting the potential growth opportunities from this venture. Piper Sandler also maintained an Overweight rating with a $20 target, citing the partnership as a $30-60 million opportunity, potentially contributing to sales growth. Meanwhile, UBS adjusted its price target for Warby Parker to $20 from $23, maintaining a Neutral rating due to mixed first-quarter results and the impact of current tariff policies. UBS analyst Mark Carden highlighted the potential financial impact of tariffs, estimating a significant gross impact on the business if no mitigating actions are taken. Despite these challenges, the partnership with Google positions Warby Parker as a notable player in the burgeoning smart eyewear market.
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