By Chibuike Oguh
NEW YORK (Reuters) – Shares of Wayfair Inc rose as much as 24% on Thursday to their highest level in more than a year, after the online furniture retailer reported a smaller-than-expected second-quarter loss as orders grew and costs fell.
While net revenue fell 3.4% year on year to $3.2 billion, Wayfair delivered more than 10 million orders, up 3% from the year-ago quarter.
The cost of merchandise sold fell 8.4% to $2.2 billion, allowing gross profit to rise by nearly 10% and net loss to narrow to $46 million. Analysts had expected a net loss of $74 million, Refinitiv data showed.
Wayfair’s shares topped out at $90.71, the highest since May 2022. The stock, which has risen 160% year-to-date, was last up 19% at $87.04.
“The second quarter saw gross margins exceed 30%, a milestone we’ve only previously accomplished during the peak pandemic period of 2020,” Wayfair Chief Executive Niraj Shah told an analyst conference call on Thursday.
Wells Fargo analysts, led by Zachary Fadem, upgraded Wayfair’s stock to “overweight” from “underweight” and raised their price target to $100 per share from $35, citing the company’s “leaner, more productive business” with lower product costs and a stronger-than-expected sales recovery.
“We believe it’s time to re-recognize Wayfair as a high growth, share-taking asset with real profit levers and upside catalysts,” the analysts wrote in an investor note.
The median price target for Wayfair’s stock from 38 analysts is $70 per share with an average rating of “buy,” Refinitiv data showed.
(Reporting by Chibuike Oguh in New York; Editing by Will Dunham and Richard Chang)