Wayfair Provides Business Update Amid Coronavirus Outbreak

Wayfair Inc. W is taking all the necessary steps to protect the safety, health and well-being of employees, customers, dealers, suppliers and communities, following the coronavirus outbreak in January 2020.

In a bid to combat the COVID-19 pandemic, it has partnered with expert epidemiologists to implement preventative best practices for the betterment of employees. It has implemented additional safety steps for the well-being of employees, customers and suppliers.

The company has increased pay and introduced other incentives for hourly employees in fulfillment centers to keep them motivated.

Following the news, Wayfair’s share price rose 41.2%, reflecting investors’ confidence in the stock.

Wayfair Inc. Price and Consensus

 

Wayfair Inc. Price and Consensus

Wayfair Inc. price-consensus-chart | Wayfair Inc. Quote

First-Quarter Guidance Update

During fiscal first-quarter 2020 conference call, Wayfair expected consolidated net revenue growth of 15-17% on a year-over-year basis and consolidated non-GAAP adjusted EBITDA margin in the negative 7.3-7.8% range. Despite the coronavirus impact, the company expects to meet or exceed its guidance for the fiscal first quarter.

The company continues to witness strong demand across most home goods categories in both U.S. and International segments. In the last reported quarter, U.S. net revenues were $413.1 million, up 23.9% year over year, while International net revenues grew 37.1% to $106.4 million.

The company witnessed strong revenue growth toward the end of March, which continued in early April.

Bottom Line

Wayfairis benefiting from the strengthening direct retail business across the United States and international regions. This continues to drive the company’s top line. Additionally, its expanding active customer base is a tailwind.

Further, the company is confident about prospects in several markets such as the U.K. and Germany. This can be attributed to its growing efforts for expanding house-brand offerings in these countries. Further, the company is aggressively investing in international regions in order to bolster presence, which is a tailwind.

However, Wayfair is suffering from mounting investment expenses, which are weighing on margin expansion. Further, rising competition from e-commerce giant Amazon poses a threat to the company’s market position.

Zacks Rank & Stocks to Consider

Currently, Wayfair carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Stamps.com Inc. STMP, eBay Inc. EBAY and Fiverr International Lt. FVRR. While Stamps.com sports a Zacks Rank #1 (Strong Buy), eBay and Fiverr International carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Stamps.com, eBay and Fiverr International is currently projected at 15%, 11.6% and 44.2%, respectively.

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