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Why Wayfair's Stock Rose 9% Today

By John Rosevear – May 6, 2020 at 8:41PM

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A day after strong earnings, several analysts boosted their price targets.

What happened

Shares of Wayfair (W 0.53%) closed higher on Wednesday, a day after the company reported earnings that beat estimates, as several Wall Street analysts raised their price targets for the company's stock.

Wayfair's shares ended the day at $180.81, up 9% from Tuesday's closing price.

So what

A day after Wayfair reported earnings that beat Wall Street's estimates, at least four analysts weighed in with notes that boosted their price targets for the stock.

A living room staged with Wayfair's furniture and home goods.

Image source: Wayfair.

Not all of these analysts are bullish on Wayfair, but all acknowledged that Tuesday's earnings release was a factor in their decision.

  • Cowen analyst John Blackledge raised his price target to $200, from $100, while maintaining the equivalent of a buy rating on Wayfair's shares. He noted that Wayfair's results were helped by stay-at-home orders amid the coronavirus pandemic, and sees gross margins rising while expenses fall.
  • Credit Suisse analyst Stephen Ju raised his firm's price target to $198, from $135, while maintaining the equivalent of a buy rating. He said that while rising sales highlight Wayfair's strong positioning among furniture retailers, he sees the company's improving profitability as the more important factor.
  • Morgan Stanley analyst Simeon Gutman isn't as bullish: While he raised his price target for the stock to $120 from $45, he maintained the equivalent of a sell rating with the view that the company's recent surge is driven by short-term factors, leaving its longer-term picture unchanged. 
  • SunTrust analyst Naved Khan is somewhere in between. He raised his price target to $163, from $110, while boosting his full-year revenue estimate as the company's profitably improvements are coming about a year earlier than anticipated. But he maintained his hold rating on the stock, noting that it's already up 84% year-to-date.

Now what

While there was reason for cheer after Wayfair's earnings report, retail-minded investors should stay mindful of what the company said about the current quarter.

Specifically, investors should note that Wayfair didn't give any guidance for the current quarter because of the ongoing economic uncertainties, except to say that the impact of COVID-19 would be much greater in this quarter than it was in the first. 

Put another way, be a bit careful with this one. 

John Rosevear 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.
$35.92 (0.53%) $0.19
Morgan Stanley Stock Quote
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$79.48 (-0.35%) $0.28
SunTrust Banks, Inc. Stock Quote
SunTrust Banks, Inc.
Cowen Inc. Stock Quote
Cowen Inc.
$38.54 (0.42%) $0.16

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