Wayfair Draws Stifel Downgrade to Hold After Stock Surges 400%

Wayfair's stock already has surpassed Stifel's 12-month price target set last week amid a 400%-plus surge from its March low.
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Shares of Wayfair  (W) - Get Report rose Monday even after Stifel analysts downgraded the stock of the online household-goods retailer to hold from buy.

The analysts acted in reaction to the stock’s surge of more than 400% from its March 19 low.

The coronavirus pandemic has kept shoppers at home, leading them to buy online and possibly to increase their purchases of household goods. And that has lifted the stock price.

The Stifel analysts, led by Scott Devitt, noted that Wayfair’s stock already has exceeded their $115 price target, which they established just last week.

The stock recently traded at $126.09, up 3.01%. On March 19, it closed at $23.53. The shares have risen 19% over the past three months.

Morningstar analyst Jaime Katz, while acknowledging Wayfair’s strengths, said she sees some danger ahead.

On the plus side, “Wayfair continues to take share in the fragmented home goods market,” she wrote in a report last month.

“The firm’s differentiation comes by way of product breadth and its logistics network, which permits faster delivery of both small and large parcels than most of its peers. Faster delivery is a function of fewer touch points, reducing damage and improving Wayfair’s brand equity with each positive delivery experience,” Katz added.

So what’s the problem? “We think competitors will continue to attempt faster delivery, spurring increasing competition,” Katz wrote. “Wayfair is competing with mass-market retailers, specialty retail, and low-cost providers, making it harder to stay front of mind perpetually.”

She puts Wayfair’s fair value at $70.