RBC Capital Markets has adjusted its financial outlook for online furniture retailer Wayfair (NYSE:W) (NYSE: W), citing a subdued forecast for industry demand and the company's strategic choice to operate with a lower gross margin in the near term.
The firm's analyst has reduced the price target for Wayfair to $53 from the previous $65 while keeping a Sector Perform rating on the stock.
The decision to lower the price target is based on revised projections for the company's future performance. RBC now expects Wayfair to experience a 2% decline in net sales for the fiscal year 2024 and a 3% increase for the fiscal year 2025, which is a change from the previously anticipated 1% increase and 6% increase, respectively.
Additionally, the analyst has adjusted the expected adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to $505 million for FY'24 and $635 million for FY'25, down from the earlier estimates of $590 million and $727 million.
Meanwhile, Piper Sandler adjusted its outlook on Wayfair, reducing the price target to $67 while maintaining an Overweight rating. This followed Wayfair's Q2 earnings release, which saw the company meeting sales expectations but falling short on gross margin forecasts.
Similarly, Truist Securities adjusted Wayfair's price target to $60, maintaining a Buy rating. This was in response to Wayfair's challenging economic environment, marked by a 1.7% year-over-year revenue decline reported in their Q2 2024 earnings call.
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