Wayfair multiple doesn't price in set-up, market will be surprised by profit upside - UBS
UBS shifted its rating for Wayfair (NYSE:W) to Buy from Neutral, raising the price target to $110 from $72 in a note to clients Monday.
UBS analysts told investors in a note that the e-commerce company's low multiple «does not fully price in its favorable intermediate-term set-up.»
Wayfair shares are up 2.5% premarket, trading around the $85.22 mark. However, it is significantly below its more than $350 high achieved during the pandemic period.
«While sentiment on the stock has improved lately, we believe the market will be surprised by the degree of profit upside that W is likely to generate in the coming periods,» wrote the analysts.
«We believe the co. is just on the cusp of entering a multi-quarter period wherein its likely to drive both sales and profit acceleration. This is likely to push its multiple back to at least its historical avg of 1.2x EV/Sales, if not higher vs. 1.0x currently.»
They also noted that Wayfair's customer base and increased spend per customer are stabilizing and should drive revenues higher, while UBS also believes it has the right cost base.
Read more on investing.com
