Wayfair (NYSE:W) is on watch after JPMorhan issued a two-notch upgrade on the stock to an Overweight rating from Underweight.
Analyst Christopher Horvers and team said Wayfair (W) remains structurally relevant in the home retailing industry with a leading online assortment and advantaged supply chain, while the market has shifted its view dramatically to the downside.
The view on Wayfair (W) is that both a positive shift in market share trends and management’s newfound commitment to controlling expenses/investments should cause a significant inflection in earnings revisions from steeply negative over the past two years to positive.
“Additionally, over the next 3-5 years, W should outgrow the category given the longer-term shift towards online retailing and its advantaged assortment/supply chain as the largest scaled online specialty player in the industry.”
JPMorgan assigned a price target of $82 to Wayfair (W) based on 0.7X EV/sales multiple, which is noted to below the pre-COVID average of 1.5x. The firm also noted that the PT is below $82, where W traded just prior to COVID.
Wayfair (W) popped 8.35% in premarket trading on Monday to follow on Friday’s 20% rally after the e-commerce retailer announced a cost restructuring plan.