Wayfair Jumps to All-Time High as 4Q Gross Margin, Ebitda Beat

(Bloomberg) -- Wayfair jumped as much as 29 percent to its highest price on a closing basis since its 2014 IPO, boosted by fourth-quarter earnings that showed a “top-line beat, strong gross margin and an Ebitda beat,” Stephens analyst Rick Nelson said in a note.

  • “We continue to view Wayfair as a disruptor in the $600 bil. home furnishings market with a superior shopping experience, an asset-light business model, and proprietary delivery systems,” Nelson said in a note
    • Rates shares overweight, price target $135
    • Note: Co reported 4Q adj. Ebitda loss of $53.8 million, better than the $76.2 million loss consensus; also reported gross margin of 24.1 percent, which was the highest reported in seven quarters
Wayfair Jumps to All-Time High as 4Q Gross Margin, Ebitda Beat
  • D.A. Davidson analyst Tom Forte says the stock is trading higher because of three things:
    • The company doesn’t seem to be seeing negative macro-environment pressure from the U.S. government shutdown and Brexit, the company’s ability to leverage the trend of consumers willing to consume advertising on e-commerce platforms, and lastly, short covering
    • Rates shares underperform with a Street-low price target of $60, saying that “until they show an ability to maintain elevated sales growth while scaling back investment spend, it’s hard to recommend shares”
  • Wayfair has 10 buys, 13 holds and 2 sells; average price target $122: Bloomberg data
  • Short interest in the stock has climbed since its October 12-month low, reaching 27 percent of the shares available to trade, according to financial analytics firm S3 Partners

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