The investment firm raised its price target to $370 a share from $315. Wayfair shares at last check jumped 13% to $326.82.
Truist analyst Naved Khan raised his long-term projection for profit margin based on earnings before interest, taxes, depreciation and amortization to 13% from 11.5%.
He sees an avenue for that to increase to 15%, driven by benefits from scale, logistical efficiencies, merchandising, seller services and availability of wholesale rates.
Wayfair "is set to emerge stronger after solidifying its position as category leader in home and an improvement in business underpinnings,” Khan wrote, according to Dow Jones.
“We expect these gains to drive healthy sales growth and improving profitability over an extended period, supporting our bullish view on the stock."
The analyst also says, however, that "elevated buyer demand due to [the] pandemic will likely settle down as the economy reopens."
E-commerce generally has benefited during the pandemic as consumers have been stuck at home due to lockdowns and social distancing.
Last week, Wayfair said it added 18.1 million customers in 2020 vs. 12.2 million new customers in 2019. It swung to a fourth-quarter profit, but the online home-decor store missed Wall Street's revenue forecast.
It reported net income of $23.8 million, or 23 cents a share, compared with a loss of $330.2 million, or $3.54 a share, a year earlier. Adjusted earnings were $1.24 a share, while the FactSet analyst consensus called for 86 cents.
Revenue in the quarter totaled $3.67 billion. That was up from $2.53 billion a year earlier, but it fell short of estimates for $3.76 billion.
"Online shopping behavior is becoming increasingly entrenched and consumer demand for the home category remains strong," Co-Founder, Co-Chairman and Chief Executive Niraj Shah said in a statement.