Warby Parker stock target raised to $25 at Piper Sandler

On Thursday, Warby Parker Inc. (NYSE: NYSE:WRBY), currently trading at $20.08 with a market capitalization of $2.44 billion, received a positive assessment from Piper Sandler, with a price target increase to $25, up from the previous $20. The firm maintained an Overweight rating on the eyewear company’s shares. According to InvestingPro data, the company has shown strong momentum with a nearly 20% return over the past year. The adjustment comes in the wake of Warby Parker’s recent partnership with Google (NASDAQ:GOOGL) on AI-powered glasses, a collaboration that analysts believe significantly expands the company’s total addressable market (TAM).

The partnership with Google, announced last week, is seen as a strategic move that not only broadens Warby Parker’s customer base but also comes with the financial backing of the tech giant. Most of the investment in this initiative is being covered by Google, which Piper Sandler suggests will lead to a substantial flow-through. This, according to the firm, justifies a higher valuation multiple for Warby Parker’s shares. InvestingPro analysis indicates the stock typically trades with high price volatility, with a beta of 2.02, making it important for investors to monitor such strategic developments closely.

The analyst’s commentary highlighted three main points of debate surrounding Warby Parker’s stock. First, there’s speculation on whether the company will see an uptick in sales for the remainder of 2025, especially since the first quarter of the year saw a slight miss in sales, attributed to unusually bad weather in February. The company maintains strong operational metrics, with a healthy gross margin of 55% and revenue growth of 14% in the last twelve months. Second, with prior investments into optometrists now concluded, there is potential for increased revenue from services such as eye exams. Lastly, with the integration of Versant, which covers 16 million lives, analysts are considering how Warby Parker will monetize this addition.For deeper insights into Warby Parker’s financial health and growth prospects, InvestingPro subscribers have access to over 30 additional financial metrics and exclusive analysis through the comprehensive Pro Research Report.

Furthermore, the reduction in China tariffs from 145% to 30% since the guidance was provided offers Warby Parker more flexibility. The firm anticipates that the company is likely to reinvest the benefits from this reduction and pass some of the upside to its operations. Based on InvestingPro’s Fair Value analysis, the stock is currently trading near its Fair Value, with analysts expecting the company to become profitable this year. Piper Sandler’s revised price target is based on a 22x multiple of the company’s projected 2026 EV/EBITDA, an increase from the 18x multiple previously used.

In other recent news, Warby Parker Inc. announced a strategic partnership with Google to develop AI-powered eyewear, prompting various analysts to adjust their outlooks. Citi raised its price target for Warby Parker from $17.00 to $22.00, maintaining a Neutral rating, while Stifel increased their target from $18.00 to $21.00, holding a Hold rating. Piper Sandler reaffirmed an Overweight rating with a $20.00 price target, reflecting confidence in the collaboration’s potential to enhance Warby Parker’s market position. Loop Capital, on the other hand, maintained a Buy rating with a $27.00 price target, viewing the partnership as an additional benefit to the company’s prospects.

The collaboration involves Google’s commitment of up to $75 million for product development and commercialization, with an option for Warby Parker to issue equity to Google. Analysts at Piper Sandler project the partnership could represent a $30-60 million opportunity, contributing to incremental sales growth. Stifel analysts noted that the partnership could expand Warby Parker’s total addressable market once the products are commercialized beyond 2025.

Warby Parker’s new AI-powered glasses are expected to compete with EssilorLuxottica’s Ray-Ban Meta (NASDAQ:META) glasses, which have sold over 2 million units since late 2023. The market anticipates the launch of Warby Parker’s smart glasses after 2025, with the potential to redefine the intersection of technology and personal accessories. The strategic partnership with Google has generated significant interest among investors, highlighting the potential growth opportunities for Warby Parker in the wearable technology market.

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