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Wayfair Stock Falls as Jefferies Downgrades Retailer to Hold

Wayfair shares slip after the online home-décor operator receives a downgrade from Jefferies on growing concern over rising costs.

Wayfair  (W) - Get Wayfair, Inc. Class A Report stock fell on Wednesday after the online home-décor operator received a downgrade from Jefferies amid growing concern over rising costs related to supply chain woes that could put a dent in sales.

Wayfair shares were down more than 3% in premarket trading after Jefferies analyst Jonathan Matuszewski downgraded his rating on the company to hold from buy amid what he sees as slowing sales due to rising supply related prices as well as the post-pandemic return-to-work shift.

Recent downward momentum in Wayfair's share price also precipitated the downgrade, Matuszewski wrote in a note to clients.

The downgrade comes as retailers struggle with rising supply chain issues that are expected to have taken a bite out of third-quarter earnings – and are expected to knock some wind out of fourth-quarter profits as well. A key gauge on the level of prices for goods and services will be released at 8:30 am ET.

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Matuszewski in August lowered the firm's price target on Wayfair to $330 from $355 following the company's second-quarter earnings numbers, which the analyst said at the time said included "mounting evidence that [Home] category tailwinds are structural."

Retailers in general are anticipating a much bigger holiday season for sales and consumer spending compared with last year, even as supplies continue to be hampered by global supply chain issues and ongoing chip shortages, which analysts see denting retailers’ earnings.

Indeed, Supply chain delays have depleted store shelves over the past few months, prompting larger retailers including Walmart  (WMT) - Get Walmart Inc. Report, Target  (TGT) - Get Target Corporation Report, Best Buy  (BBY) - Get Best Buy Co., Inc. Report and others to implement ambitious inventory increases, which they see as a better bet than the risk of less demand for the holiday season.

At last check, shares of Wayfair were down 3.1% at $227. Year to date the stock is down 2.17%.