Shares of Wayfair (NYSE:W), an e-commerce business selling over 14 million products spanning furniture, decor, and housewares, among others, declined as much as 10% Monday after a Wall Street analyst turned bearish.
Morgan Stanley analyst Simeon Gutman downgraded Wayfair from equal weight to underweight while moving the price target from $75 down to $65. The move comes almost exactly a month following a downgrade from Loop Capital, and a couple of weeks after Wayfair was reported to have laid off 550 employees due to growing too fast and being inefficient. In a note to investors, Gutman said: "Our channel checks suggest W's revenue growth is still decelerating, and macro headwinds are rising. We are reducing our 2020 revenue estimates to reflect higher risk."
It's understandable that analysts are a little cautious heading into Wayfair's Feb. 28 fourth-quarter 2019 results, especially considering the company's connection to China. Wayfair has roughly 80% of its goods sold sourced from China, which is still dealing with disruptions from the coronavirus outbreak. That amount of uncertainty is definitely bad news for investors hoping to see Wayfair's slowing revenue growth reignited in a competitive consumer goods industry during the fourth quarter and into 2020. As always, take these downgrades and stock price volatility with a grain of salt, and tune in for the company's fourth-quarter presentation Friday for management's insight.