W - Wayfair shoots higher after stellar earnings double upgrade from Wells Fargo

2023-08-03 11:03:17 ET

Wayfair ( NYSE: W ) scored a double upgrade from Wells Fargo and a bump up from Gordon Haskett, driving shares even higher after the company reported red-hot earnings.

Shares rose 19% on Thursday.

Wells Fargo notched shares up to Overweight from Underweight, noting that it’s “late to the party.” Gordon Haskett pushed W to Buy from Hold seeing “meaningfully more upside.”

For the second quarter, Wayfair ( W ) earlier today reported non-GAAP EPS of $0.21 beat the average analyst estimate by $0.93, while revenue of $3.17B beat by $70M.

“W's topline/EBITDA progress is real, and we see a multi-year upward revision cycle just beginning,” Wells Fargo said. “With shares -22% vs. '17-19 EV/Sales and ~30% short interest, we see upside,” even with lingering macro concerns and a highly promotional category.

“Topline trends just inflected, profit progress has legs& W is pivoting to a leaner, more productive business,” Wells Fargo said. “It’s time to re-recognize W as a high growth, share-taking asset w/ real profit levers & upside catalysts ahead.”

Four years on...

Gordon Haskett first upgraded shares of Wayfair ( W ) four years ago predicated on both an improvement in the top-line and EBITDA margin expansion.

“Both occurred much quicker and stronger than we anticipated a few years ago,” the firms said. “When we fast forward to today . . . we see a similar inflection point in the maturation of the business with the company clearly focused on improved profitability all at the same time that revenue trends in both e-commerce and home furnishings appear to be now bottoming out.”

Web traffic checkout checks are improving and suggest sales declines likely bottomed in 2Q23, Gordon Haskett said. W has also significantly pulled back on promotional activity.

The firm also sees the Boston-based company gaining share from the demise/reinvention of Bed Bath & Beyond.

Wayfair ( W ) has eight Strong Buys from Wall Street analysts, five Buys, 20 Holds, one Sell and two Strong Sells.

W is up 162% so far in 2023.

More on Wayfair:

• Wayfair pops as Americans continue to buy beds, blenders & bar stools
• Wayfair Non-GAAP EPS of $0.21 beats by $0.93, revenue of $3.17B beats by $70M
• Wayfair rallies after Piper Sandler turns bullish just ahead of earnings

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