Wayfair Is Set To 'Amazon' The Home Furnishing Category

The "Amazon.com, Inc." AMZN of the home furnishing category isn't Amazon, rather it is Wayfair Inc W, at least according to analysts at Stifel. The firm's Scott Devitt upgrades Wayfair's stock rating form Hold to Buy with a price target boosted from $75 to $78 as the company succeeded in building out an entire e-commerce ecosystem and at current levels, the stock represents a "reasonable entry point."

Wayfair's operations within the online home goods space dates back 15 years and the company managed to earn itself a positive reputation with both clients and suppliers, Devitt stated in his upgrade note. But equally important to the company's growth is a supply chain which satisfies the many challenges in logistics, selection and discoverability.

Wayfair is well positioned to benefit from the North American and Western European home goods market which at $400 billion is one of the largest and growing segments of retail, Devitt continued. Meanwhile, online penetration within the category is still shy of 10 percent in North America and just above 10 percent in Western Europe. Wayfair's market share of this segment is not even 1 percent and Wayfair could be the recipient of a shift toward online shopping.

While Amazon will no doubt be a major beneficiary of the online shift towards home furnishing, the analyst concluded. But Wayfair has been active in building out a very similar business model which made Amazon's other segments successful in other categories and regions.

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