What Happened:
Shares of online home goods retailer Wayfair (NYSE: W) jumped 5.55% in the after-market session after JPMorgan added the stock to its Analyst Focus List. In January 2023, JP Morgan upgraded its rating on the company from Underweight (Sell) to Overweight (Buy) and raised the price target from $35 to $63. This "double upgrade" raised eyebrows since it was a 180-degree turn in JP Morgan's view of Wayfair. This addition to the Focus List further showed confidence in the stock over the next year or so, which is typically the time horizon on which Wall Street analysts focus.
What is the market telling us:
Wayfair's shares are very volatile and over the last year have had 90 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was 26 days ago, when the stock gained 18.1% on the news that the company reported first-quarter results that exceeded analysts' revenue and earnings per share (EPS) expectations. Active customers also came in above estimates. The company nearly broke even on adjusted EBITDA, with management expecting to have positive Adjusted EBITDA in the second quarter. Improving profitability is a welcome dynamic for the stock. Overall, it was a strong quarter.
Wayfair is up 18.8% since the beginning of the year, but at $38.93 per share it is still trading 47.1% below its 52-week high of $73.54 from August 2022. Investors who bought $1,000 worth of Wayfair's shares five years ago would now be looking at an investment worth $411.22.
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