On Thursday, Deutsche Bank analysts initiated Wayfair (NYSE:W) with a Buy rating and a $55 per share price target.
The price target suggests a potential 16% upside for the stock, which closed Wednesday's session at $47.59 after a more than 4% rise. It is down around 1.7% premarket.
Analysts told investors that the firm is positive on W shares despite the macro challenges that continue to plague the Home goods industry.
The Buy rating is based on several factors, such as the company's large market opportunity, macro headwinds easing, gross margins continuing to move higher, headcount growth, and accelerating revenue growth.
Wayfair has a "large and generally fragmented market opportunity" where it stands as the "pure-play e-commerce market leader," said the Deutsche Bank analysts. "Better yet, share gains have improved recently as inventory positions normalize and Wayfair is thus able to differentiate in the market based on premium selection, price, and delivery speeds."
"As AOV declines moderate and Wayfair continues to compound against the >10% unit growth it is set to deliver in 2H23 despite the challenging macro environment, we believe that the revenue algorithm sets up for accelerative growth in the 2H24," analysts added.
They also stated that accelerative revenue growth and continued margin improvement should drive Wayfair’s multiple back toward its average trading range.