Wayfair stock up on Evercore ISI upgrade, price target boost

Shares of Wayfair (W) are trading higher Thursday after Evercore ISI updgraded the company's stock. The firm has upgraded its rating on the homeware retailer to Outperform from In-line, while also raising Wayfair's price target to $80 per share due to the company's improving financial performance, driven by the implementation of cost-cutting measures.

Yahoo Finance's Seana Smith and Madison Mills breaks down the details.

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Editor's note: This article was written by Angel Smith

Video transcript

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SEANA SMITH: Well, good news for Wayfair this morning as Evercore ISI upgraded the online home retailer to outperform from in-line. They also raised their price target to 80 bucks a share. That's up from 65. Now, the analyst team, they're saying that the hardest part is behind Wayfair, and this comes as the company is implementing some cost cutting measures that we have covered many times in Yahoo Finance. Also as revenue has begun to grow yet again.

And at the top of this note, Maddie, what's that got to me was really just the fact that they're upgrading based on fundamentals and they put it pretty straight forward here in this first line saying, Wayfair is trying to look its best that it has looked in its 10th year as a public company. And they want to be there, Evercore wants to be there for the party when revenues accelerate. And so as a result, they're going to upgrade their stock to outperform at this point.

MADISON MILLS: I love that they say they want to be there for the party, right? Because don't we all, right? But it's interesting that they talk about how a lot of the other home-related stocks in their coverage have already participated in a little bit of the recovery that we're seeing in the housing market. They're seeing that there's not a lot of that upside priced into Wayfair stock, so to your point, indicating in terms of their price target about a 23% upside to this name.

But we have to wonder whether or not we're actually going to see that play out because of this bifurcated consumer that we continue to see. Are we going to start to see more upside for the more pricey home names out there, like the Restoration Hardwares of the World, rather than a Wayfair where you have the consumer that's trading down, maybe doing the Drew Barrymore line at Walmart, which I may or may not be participating in.

SEANA SMITH: I haven't checked out that line yet. I need to, but this also always goes back to the basics when it comes to why they're a little bit more constructive on this name, now why they are seeing some fundamental improvement. A lot of that is based on the fact that Wayfair is also actually going back to the basics, going back to what has worked in the past. They started doing that just about a year and a half ago starting in 2022. So just around two years ago, they began to return to the core which is a couple of defining principles as Evercore laid out here when it comes to the cost structure, strong execution, also excellent customer service. What had paid off for Wayfair in the past or returned to that, a refocus on those three principles is enough for Evercore to be a bit more bullish on this name.