On Friday, Baird maintained an Outperform rating on shares of Warby Parker Inc. (NYSE:WRBY) and increased the company's price target from $23.00 to $30.00. The firm's analyst cited the eyewear company's potential for continued market share growth within the approximately $66 billion U.S. eyewear category. Warby Parker's competitive pricing, starting at $95 for frames, and its expansion strategy were highlighted as key drivers.
The analyst noted Warby Parker's comprehensive eyecare strategy, which includes an expansion of contact lenses, higher-priced progressive lenses, and eye exams, as a significant factor. These offerings currently have lower market penetration compared to industry standards, suggesting room for growth.
The company's retail expansion plan is also on track, with around 40 new stores opening each year. This represents a mid-teens percentage growth annually, with the end of the third quarter in 2024 seeing 269 retail stores in operation against a long-term potential of over 900.
Moreover, the digital business for Warby Parker has resumed growth in 2024, following a period of normalization after the Covid-19 pandemic. This recovery is part of the steady execution and solid share gains observed by the analyst in a market that has been disrupted by the pandemic. The altered patterns of glasses purchasing and the extended purchasing cycle have impacted overall category demand.
The eyecare market is beginning to show signs of reverting to more historical buying patterns, according to the analyst. This shift, along with potential pent-up demand, could lead to performance exceeding Baird's current expectations for Warby Parker. The company's strategic initiatives and market position have positioned it well to capitalize on these emerging trends in the eyecare industry.
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