PacCrest Says Wayfair Story Is 'Still Underappreciated,' Sees Long Growth Path Ahead

Wayfair Inc

reported better-than-expected financial results on Wednesday morning, driven by "successful holiday initiatives." In the afternoon, analyst Chad Bartley at Pacific Crest weighed in on the results, reiterating an Outperform rating and a $39 price target on the stock. According to the report, the story is still underappreciated, and valuation, highly attractive. The firm believes the "company is executing well and business momentum is strong." Consequently (and also encouraged by robust guidance), they are raising their revenue forecasts for fiscal 2015 and 2016, from $1,618.5 million to $1,740.6 million, and from $2,041.1 million to $2,223.1 million, respectively, on losses of $(1.06) per share and $(0.62) per share, correspondingly. Pacific Crest likes Wayfair, the report states, in account of its position as the leading online retailer of home furnishings and decoration. They believe that the company can sustain mid-20 percent revenue growth over the next several years. "This should be driven by at least 30% growth in core revenue (over 80% of total revenue) and roughly flat other revenue. In the next three years, we expect investments to drive losses; however, over the intermediate to long term, we expect Wayfair to scale the business and drive leverage in all areas of its operating expenses, and we believe higher single-digit EBITDA margins are achievable."