Wayfair gains as Piper Sandler upgrades on ‘improving’ sales and share gains

Wayfair (NYSE:) gained 6% in pre-open trading Monday after Piper Sandler upgraded the stock on improving sales and share gains.

Analysts lifted their rating on the stock to Overweight from Neutral and raised the price target to $97 from $35, suggesting about 33% upside from Friday’s closing price.

The analysts highlighted three reasons for the upgrade:

1. According to the firm’s Q2 Furniture Retailer survey, the home furnishings industry is showing signs of stabilization. As a result, Wayfair’s sales are on an upward trend, and the company is regaining market share.

2. After Wayfair’s Supplier Summit in June, the feedback from suppliers has been the most positive it has been in over two years. Notably, suppliers now display increased confidence in embracing Wayfair’s supplier services such as CastleGate and advertising. This newfound trust is essential for the company’s continuous gross margin expansion.

3. Valuation is attractive at 0.9x EV/Sales vs. the 5-year mean of 1.2x.

Furthermore, the analysts said Wayfair is poised to achieve sustained EBITDA profitability, and that they anticipate the upcoming Investor Day on August 10 will bolster investors’ long-term confidence in the company’s profitability prospects.