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Wayfair Inc (NYSE:W) shares continued to fall Friday after reporting a bigger-than-expected first-quarter loss.
Sell-side analysts remain mostly cautious on the still-unprofitable e-commerce company, saying heavy spending is a near-term headwind, though several still like the company in the long term.
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Analysts noted another quarter of continued revenue growth — a metric that's been consistently strong for several quarters — by the online furniture and décor retailer.
But Wayfair reported a quarterly loss of $1.62 per share, just a bit steeper than the loss expected by analysts. Wayfair’s revenue came in slightly above expectations at $1.945 billion.
The Analysts
Bank of America Merrill Lynch's Justin Post reiterated a Neutral rating with a $175 price target.
Stifel’s Scott Devitt maintained a Hold rating on Wayfair and raised the target price from $132 to $150.
Wedbush's Seth Basham maintained a Neutral on Wayfair and raised the target price from $120 to $140.
KeyBanc Capital Markets' Edward Yruma maintained a Sector Weight rating.
Credit Suisse's Stephen Ju maintained an Outperform rating with a $195 price target.
The Takeaways
Margins are an issue for Wayfair, which is boosting hiring.
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BofA's Post said expenses are trending higher as Wayfair builds out European operations and moves more logistics in-house. “[The] potential for year-over-year margin pressure for next two quarters (more hiring coming) could remain a sentiment headwind,” the analyst said.
Stifel's Devitt said he sees a "strong opportunity" for sustainable, long-term topline growth as Wayfair gains share.
“Slower near-term international growth and weaker margins keep us Hold rated.”
Credit Suisse’s Ju, while acknowledging the spending, said it will pay off.
“The premise of our investment thesis is entirely predicated on the long-term growth and profitability trajectory that these investments will help drive,” the analyst said.
KeyBanc’s Yruma also finds some positives in Wayfair’s spending, particularly the move to bring logistics in-house. The analyst said the move will eventually drive shipping costs lower and boost customer satisfaction.
Wedbush’s Basham said the cost of getting new customers is a concern, though. The company may have to slow new customer-focused advertising or profitability will keep suffering, he said.
Price Action
Wayfair shares were down 1.89 percent at $149.13 at the time of publication Friday.
Related Links
Port Report: Wayfair Grows Its International Logistics Business To Keep Up Quick Delivery Times
Andrew Left Adds To Wayfair Short Position After Q4 Print
Photo courtesy of Wayfair.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.