W Stock Gains Premarket: Rosenblatt Calls Wayfair An AI Beneficiary, Sees 17% Upside

• Rosenblatt initiated Wayfair at Buy with a $125 price target, with a 17% upside potential.
• Last week, Bernstein upgraded Wayfair to Outperform, citing stronger U.S. e-commerce trends and upside to expectations. 
• Wayfair’s revenue per active customer increased 4.2% in Q2. 

Wayfair Inc. (W) is drawing a bullish view from Rosenblatt, with analyst Scott Devitt pointing to the online home-goods retailer’s ability to withstand a challenging market and its potential to benefit from improving industry conditions.

Wayfair Gets A Bullish Initiation On AI Opportunity 

Devitt launched coverage of Wayfair with a ‘Buy’ rating and a $125 price target, implying a 17% upside to the stock’s last closing price. The analyst believes the company has demonstrated that its business model can remain resilient despite pressure across the broader home-furnishings market.

Rosenblatt sees a pickup in industry demand as a potential catalyst for Wayfair. If growth across the home-goods sector improves, the company could gain additional support as consumers return to higher levels of discretionary spending.

According to the firm, Wayfair's extensive product information and vertically integrated online marketplace could also give the company an advantage as artificial intelligence becomes more important in e-commerce. Its detailed product catalog provides a large amount of structured information that can support AI-powered shopping and discovery tools.

Wayfair stock traded over 1% in Thursday’s premarket and is headed for a weekly gain. 

Bernstein Upgrades Wayfair

Last week, Wayfair also received an optimistic assessment from Bernstein, which expects the retailer to outperform as its U.S. e-commerce business shows signs of becoming more durable. Bernstein upgraded Wayfair to ‘Outperform’ from ‘Market Perform’ and increased its price target to $125 from $100. 

Bernstein says Wall Street may be underestimating Wayfair’s progress. The firm believes the company’s improving business could allow it to beat current forecasts. 

Earlier this month, Wayfair reported $3.5 billion in second-quarter revenue, up 7.5% year-on-year, driven by an 8.7% increase in U.S. sales to $3.1 billion. The company posted $242 million in adjusted EBITDA, $301 million in free cash flow and a nearly breakeven net loss of $1 million. 

Wayfair ended the quarter with 21.7 million active customers, up 3.3% year over year. Orders rose 6% to 10.6 million, while revenue per active customer increased 4.2% to $596.

W Stock: Retail View 

On Stocktwits, retail sentiment around the stock remained in ‘neutral’ territory. 

A user said, “There a better looking set up out there right now than $OSCR and $W?.”

W stock has gained over 7% year-to-date. 

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