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Why Wayfair Stock Popped Today

By Jeremy Bowman - Apr 24, 2020 at 10:38AM

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Shares of the online retailer gained on another analyst endorsement.

What happened

Shares of Wayfair (W 6.36%) were on the rise again after the online home goods seller got a bullish analyst note, the latest piece of good news for a stock that's emerged as the one of the best recovery plays on the market amid the coronavirus pandemic. After today's gains, Wayfair stock is up more than 400% from its nadir in March.

Today, the stock was up 10.7% as of 10:42 a.m. EDT.

A furnished living room.

Image source: Getty Images.

So what

This morning, Stifel lifted its price target on Wayfair from $75 to $115 and maintained its buy rating on the stock. Analyst Scott Devitt raised his estimates for the rest of the year, noting a stronger trend than previously forecast as the company seems to be benefiting from stay-at-home orders that have forced rivals to close their stores. Devitt said the pandemic would accelerate the shift to online shopping where Wayfair, with its own dedicated logistics network, is the leader. 

That endorsement follows price target hikes from Jefferies and SunTrust earlier in the week as Wall Street takes a bullish stance ahead of Wayfair's May 5 earnings report.

Shares of the e-commerce operator have been surging since the company said on April 6 that it would meet or exceed its first-quarter guidance, and that sales had started soaring on the platform. Management said its sales growth rate had more than doubled toward the end of March from about 20% earlier in the quarter as the stay-at-home orders drove demand for home office furniture, children's products, and other such goods. Additionally, the company said it is accelerating efforts to reach adjusted profitability and improve its cash flow profile.     

Now what

Wayfair is cleary getting a significant tailwind from the stay-at-home orders, but that may only be temporary. With unemployment rising fast, the company may see challenges from declining consumer spending, though as long as stores are closed or shoppers are reluctant to visit them, Wayfair should be protected.

Investors should keep their eyes on the bottom line in the upcoming report as the online retailer has never been profitable; the company's next goal is breaking even, which it pledged to do next year. The company also laid off hundreds of employees earlier this year to trim costs. In the first quarter, analysts see revenue rising 20% to $2.3 billion, but expect Wayfair's loss per share to widen from $1.62 to $2.61.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Wayfair. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Wayfair Inc. Stock Quote
Wayfair Inc.
$68.62 (6.36%) $4.10
SunTrust Banks, Inc. Stock Quote
SunTrust Banks, Inc.
Jefferies Financial Group Inc. Stock Quote
Jefferies Financial Group Inc.
$34.86 (1.87%) $0.64

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