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Why Most Analysts Rate Wayfair Stock a ‘Hold’

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Dec. 27 2018, Published 4:38 p.m. ET

Ratings synopsis

The majority of Wall Street analysts covering Wayfair (W) have maintained a “hold” rating on the stock. On December 26, of the 24 analysts covering Wayfair, 58% recommended a “hold” while 38% rated the stock a “buy” and the remainder rated it a “sell.”

On December 7, Cowen and Company increased its price target for Wayfair to $130.00 from $120.00. Currently, analysts’ 12-month average target price for Wayfair stock is $118.20, which reflects a potential 31.6% upside to its stock price on December 26.

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Wayfair is a fast-growing online furniture retailer. It’s improving its logistics network, expanding its overseas footprint, and boosting its brand visibility to grow its top line. Wayfair has estimated the US home market’s revenue to grow to $396 billion by 2027. The company believes online sales will constitute $128 billion of this total, which spells a big opportunity for online retailers.

Wayfair is also expanding its operations in Canada, the United Kingdom, and Germany. However, ongoing investments could continue to dent the company’s profitability and bottom line in the near term.

Ratings for other furniture retailers

Of the 24 analysts covering Williams-Sonoma (WSM), 79% have provided a “hold” rating on the stock while 17% have rated it a “sell.” There have been no price revisions for Williams-Sonoma in the last 30 days. Currently, analysts’ mean target price for Williams-Sonoma is $56.28, reflecting a potential ~13.0% upside to the stock as of December 26.

Of the 22 analysts covering RH (RH), 50% recommend a “buy” and 45% recommended a “hold.” Analysts’ mean target price for RH is $165.67, implying a potential 39.5% upside.

Of the 34 analysts covering Home Depot (HD), 74% have a “buy” rating on its stock while 26% have rated it a “hold.” The mean price target for Home Depot is $204.79, which indicates a potential 21.7% upside.

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