Piper Sandler has reaffirmed an Overweight rating on Wayfair and kept its $125 price target after the online home goods retailer released fourth-quarter results and provided first-quarter guidance. The analyst note emphasized that market share gains appear to be accelerating, a conclusion the firm said aligns with feedback from Wayfair's suppliers.
Management's guidance for the first quarter was described as conservative, explicitly incorporating early-quarter weather disruption and assuming no lift from tax refunds. The company signaled a willingness to accept narrower gross margins later in the year - potentially dipping below 30% - as a deliberate tactic to speed market share gains and increase gross profit dollars.
Piper Sandler underscored that expense management at Wayfair remains disciplined. The firm interprets this as evidence that improvements will continue to flow through to EBITDA, supporting profit expansion even if gross margins compress.
The brokerage also noted notable share-price movement around the earnings release. Wayfair's stock declined about 10% following the report to $79.57. Piper Sandler attributed that drop in part to short-term trading following an 8% rally the previous day and to the possibility that some investors had overly optimistic expectations for fourth-quarter revenue. The firm characterized such swings as consistent with the stock's recent pattern: a 72.75% return over the past year alongside a 20.75% year-to-date decline.
Analyst projections referenced in the note suggest Wayfair is expected to be profitable this year, with earnings forecast at $3.14 per share according to InvestingPro analysis. However, the same analysis indicates that the shares currently trade above its estimated intrinsic value based on InvestingPro's Fair Value work - a contrast to Piper Sandler's view that recent weakness may create a buying opportunity given the company's operating performance and outlook.
Separately, Wayfair's fourth-quarter 2025 financials showed an EPS of $0.85, beating the $0.68 consensus forecast for a 25% surprise, with revenue at $3.3 billion in line with estimates. U.S. revenue rose 7.4%, outpacing a 6% estimate, while adjusted EBITDA beat Consensus Metrix expectations by 11% and expanded 133% year-over-year. Despite these metrics, the stock slipped in pre-market trading.
In other analyst moves, JPMorgan trimmed its price target on Wayfair to $105 from $114, citing margin pressure, while maintaining an Overweight rating. These developments reflect both positive operating momentum and continued analyst debate over margin trajectory and valuation.
Summary: Piper Sandler maintains an Overweight rating and $125 target on Wayfair after Q4 results and a cautious Q1 outlook, citing accelerating share gains, controlled expenses, and management's readiness to accept lower gross margins to grow share and gross profit dollars.