Wayfair gets 2 upgrades on its earnings report and the stock climbs

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Wayfair stock extended its gains on Friday.

The time of dreams

Wayfair

The stock jumped more than 6% on Friday, a day after the online home furnishings seller reported better-than-expected profits. The first quarter results were good enough to earn the title two upgrades.

Gordon Haskett’s Chuck Grom raised his rating on Wayfair (ticker: W) to buy on hold on Friday, setting a price target of $ 400. In the last Friday trading, Wayfair stock climbed 6.3% to $ 304.12, while the

S&P 500

was up just 0.7%.

Grom explains that the actions of other pandemic winners, such as

Costco Wholesale

(COST) and

General dollar

(DG) – had struggled as investors wondered how they could improve their robust sales in 2020. But stocks rebounded after recent data showed they “could indeed ‘comp-the-comp’ . ” In that sense, Wayfair’s good results – and the fact that quarterly sales are only down in the high single-digit range – suppress a headwind for the stock, he says.

Wayfair stocks may outperform the rest of the year, boosted by high repeat orders from its millions of new customers, he adds. The strength of the housing market may propel the demand for household furnishings “into 2022 (and potentially beyond),” he says. This could create a long avenue for growth, especially as people are more comfortable shopping online in this category. Grom is also optimistic about the operational changes made by Wayfair, as evidenced by improving gross profit margins and lower expenses.

Elsewhere, Stifel’s Scott Devitt raised his rating on Wayfair for Hold from Sell, while raising his price target from $ 200 to $ 280.

Devitt left his sales estimates for the rest of the year largely unchanged as he still believes revenue growth will slow in the face of tough comparisons. However, he also pointed out the company’s cost structure, which he says may offer larger margins than previously thought.

This leads it to increase its earnings before interest, taxes, depreciation and amortization, or EBITDA, estimate for the second quarter to $ 210 million, from $ 160 million previously, and to $ 397 million for the second half, from 332 dollars. million.

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