Raymond James upgraded shares of Wayfair (NYSE:W) to Strong buy from Market Perform in a note Friday, assigning the stock a $65 per share price target.
Analysts told investors they see a refreshed set-up for the company this year.
"Our change in opinion is not a call directly on 4Q23 results, though we think expectations are getting lowered," they explained.
The firm's more constructive stance stems from two main points. The first is that after a challenging period for the U.S furniture industry following COVID, they believe demand trends are nearing the bottom, "with adjusted (removes inflation tailwind) U.S. furniture sales likely near 2015/2016 levels in 2023."
The second point is that they believe the company's recent cost-cutting initiatives will "enable Wayfair to grow EBITDA meaningfully as demand returns."
"Specifically, while the demand recovery for home furnishings will likely be rocky, we believe the 'pull forward' in demand during covid is likely close to working its way through when looking at inflation adjusted sales," analysts wrote.
With Wayfair down 11% year-to-date, Raymond James feels the medium-term risk/reward set-up is very compelling.