While investor concerns have pushed Wayfair Inc W's lower, the bullish case for the equity remains unchanged, and investors need some "clarity," according to PiperJaffray.
The Analyst
PiperJaffray's Peter Keith maintains an Overweight rating on Wayfair's stock with a price target lowered from $112 to $92.
The Thesis
Wayfair's stock has lost some ground in recent weeks amid three headlines that in reality are unlikely to have much of an impact on the company, Keith said in a research report:
Overstock.com Inc OSTK is making a push to become more aggressive in the e-commerce landscape through an advertising campaign, Keith said. Wayfair boasts "significant" advantages over Overstock in logistics and brand recognition, he said.
Wayfair's often-cited customer acquisition cost of around $70 is not accurate, and a more realistic figure is closer to $50, Keith said. The company is known for reporting an overinflated CAC that allocates 100 percent of advertising spend to acquiring new customers, but in reality more than 60 percent of orders come from repeat customers, the analyst said.
A pending Supreme Court case on e-commerce sales taxes should be a "relative non-event" for Wayfair, as the company already charges sales tax on around 75 percent of sales, according to PiperJaffray.
Price Action
Wayfair shares were up 5.22 percent near the end of Tuesday's trading session.
DA Davidson Downgrades Wayfair In The Face Of Increased Competition From Overstock
Despite Overstock's Stalled Common Offering, DA Davidson Remains Bullish
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