Updated Aug 11 at 5:04pm ET.
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The average rate for a 30-year fixed mortgage reached 6.69 percent this week. Higher rates make it more expensive for people to buy homes, which usually leads to fewer people moving and spending money on new furniture.
Because Wayfair sells large items like sofas and appliances that people often buy when moving, a sluggish housing market can slow down its sales growth. While the business has recently returned to growth, these higher borrowing costs are a headwind to keep an eye on.
Needham kept its buy rating on the stock with a $133 target price. This is one of the more optimistic views among analysts, sitting about 26 percent higher than the current price, following a quarter where the company showed accelerating growth in the United States.
Source: Needham
BMO Capital raised its price target from $105 to $115 following the company's recent quarterly results. This suggests the firm sees more value in the stock than before, though they still expect it to perform in line with the broader market.
Source: BMO Capital
Wayfair brought in $3.52 billion in revenue last quarter, beating the $3.47 billion analysts expected. The growth was led by the U.S. business, where sales rose nearly 9 percent, helping the company generate $360 million in cash from its operations.
This is a significant turning point because it shows the company is successfully growing again after a long post-pandemic slump. While the international business saw a small decline, the overall scale and efficiency of the U.S. logistics network are starting to produce the kind of cash flow that supports the long-term view of the business.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The company announced plans to open a new physical retail location in Pittsburgh next year. This is part of a broader strategy to move beyond being just an online store and build a physical presence where customers can see furniture in person before buying.
Source: PRNewsWire
Analysts flooded the stock with higher price targets following the company's strong second-quarter earnings report. Most analysts, 30 of 57, rate the stock a buy, and the average target of $111 suggests 8% upside from today's price.
Management has a very consistent habit of beating expectations, clearing the bar in seven of the last eight quarters. This suggests they have a firm handle on their costs even as sales fluctuate.
| Expectation | |
|---|---|
| EPS | $0.79 |
| Revenue | $3.35B |
