Wayfair Battered With Virus Adding Headwinds to Analysts’ Doubts

(Bloomberg) -- Wayfair Inc. shares tumbled Monday, extending its sell-off to a seventh straight trading day, after fourth-quarter results missed expectations and revenue growth thus far this quarter that's trending below historical rates.

The company also warned Friday that the coronavirus was resulting in disruptions to its supply chain, prompting a round of analyst caution. The average price target for the online furnishings retailer currently stands around $83, down from $97 a week ago.

Shares dropped as much as 13% in Wayfair's seventh straight decline, the longest such streak since August. The stock has shed more than 30% of its value over the seven-day collapse, and is on track for its lowest close since 2017.

Here's what analysts are saying:

Deutsche Bank, Kunal Madhukar

“We may be at the center of a perfect storm,” with the prospect of a further deceleration in sales coming on the heels of “multiple quarters of slowdown from tariff relation market dislocation.”

“It is tough to say whether this is the low,” given the difficulty of assessing the length and breadth of the impact of the coronavirus. However, “investor concerns likely are more than priced into the shares already,” and it is more likely the stock will be higher in a year's time, assuming the economic outlook “does not deteriorate materially.”

Buy rating, price target lowered to $77 from $100.

Morgan Stanley, Simeon Gutman

“Near-term results are likely to fall short of market expectations,” and this “creates an unfavorable risk/reward skew” relative to peer companies.

The company is “facing persistent headwinds to revenue growth,” and it will be “tricky” to “reinvigorate revenue growth while cost cutting in the near-term.”

Underweight rating, price target cut to $55 from $65.

DA Davidson, Tom Forte

The company could achieve “sustainable profitability much earlier than we had previously forecast,” though this would come “at the cost of a much lower rate of sales growth.”

Underperform, price target cut to a Street-low view of $45 from $65.

Canaccord Genuity, Maria Ripps

The focus on improving profitability “should lead to positive adj. Ebitda in the U.S. at some point in 2021.”

The company has “a valuable competitive moat” and it should see market-share gains ahead; it has “a long runway for growth.”

Buy rating, price target lowered to $100 from $130.

William Blair, Dylan Carden

“Supply constraints stemming from the coronavirus” have “clearly caught the company off-guard.”

“Concerns over further deceleration in revenue and lack of visibility in the ultimate path to profitability at increasing levels of cash burn will remain bigger concerns” than valuation.

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Courtney Dentch

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