BofA Downgrades Wayfair On Weak Near-Term Growth Outlook

Wayfair Inc (NYSE: W) faces tough comparisons through the first quarter of 2022, while the company’s core mass consumer customer could shift spending from furnishings to other categories like travel and entertainment in 2022, according to BofA Securities.

The Wayfair Analyst: Curtis Nagle downgraded Wayfair from Neutral to Underperform and lowered the price target from $265 to $175.

The Wayfair Thesis: Although the stock trades at a discount to its five-year average, this seems warranted “given slower projected revenue growth and below peak margins,” Nagle said in the downgrade note.

“Since Wayfair reported 3Q21 earnings on Nov. 4th and stated that 4Q QTD sales were tracking down (10)% YoY, real-time data points have softened. We see risk of Wayfair missing 4Q21 consensus sales of a (9)% decline YoY and we are lowering our estimate to (16)% YoY from (9)%,” the analyst wrote.

“Consensus 1Q22 also looks high given it only implies a modest QoQ decline from 4Q21 which would be unusual seasonality,” he added.

“We still see positives in the long term growth story but we believe a more cautious view is warranted given a weaker near-to-medium growth outlook and limited positive catalysts for growth,” Nagle further stated.

W Price Action: Shares of Wayfair were down 9.23% at $188.16 Thursday afternoon.