W - Wayfair rallies after Piper Sandler turns bullish just ahead of earnings

2023-07-31 10:50:14 ET

Wayfair ( NYSE: W ) rallied on Monday after Piper Sandler upgraded the online retail stock to an Overweight rating from Neutral.

Analyst Peter Keith and team pointed to stabilizing trends for the home furnishings industry based on the firm's Q2 Furniture Retailer survey. Keith also said sales at Wayfair appear to be improving, and Wayfair ( W ) said to back to taking market share. Notably, supplier feedback on Wayfair ( W ) following the company's Supplier Summit in June is at its most positive level in more than two years.

"Importantly, suppliers now seem more confident in leaning into Wayfair's supplier services (CastleGate, advertising, etc.), which is important for ongoing gross margin expansion."

On a valuation check, Wayfair ( W ) is called attractive at 0.9X EV/sales vs. the 5-year mean of 1.2X.

Looking ahead, the Wayfair Investor Day event is seen as a potential share price catalyst.

Shares of Wayfair ( W ) moved up 3.57% in morning trading on Monday and are now almost up 20% over the last six weeks. The online retail will report earnings on August 3, with a streak of five consecutive revenue beats on the line. Wayfair ( W ) is forecast to report $3.09B in revenue and post an EPS loss of $0.72. 24 of the last 26 EPS revisions from analysts have been to the upward side. The stock is on Seeking Alpha's Catalyst Watch this week due to options trading implying a double-digit share price move following the earnings report.

More on Wayfair:

• Wayfair: Sell This Year's Rally (Rating Downgrade)
• Growth metrics on Wayfair
• Recent options trades on Wayfair
• Seeking Alpha's Quant Rating for Wayfair

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