Truist Securities on Thursday cut its price target for Wayfair to $105 from $120 but kept an overall Buy recommendation on the shares. The firm said the adjustment reflected the company’s first-quarter 2026 guidance and management commentary around gross-margin trends.
Wayfair (NYSE:W) told investors it expects mid-single-digit percentage growth for the first quarter of fiscal 2026, a pace that Truist notes is below consensus expectations. Management also warned that gross margins could potentially fall below 30% later in fiscal 2026, a prospect that weighed on Truist’s forward-looking model and contributed to the price-target reduction.
The company reported fourth-quarter 2025 results that topped expectations on both top-line and bottom-line metrics. Wayfair delivered earnings per share of $0.85 for the quarter, outpacing the $0.68 forecast, and recorded revenue of $3.3 billion, in line with consensus. Despite the beat, the stock fell following the release.
Investor attention has balanced the stronger-than-expected quarterly performance against management’s more cautious margin commentary. Truist acknowledged that Wayfair continues to outperform in the home-furnishings category, gaining market share amid category-wide challenges, and pointed to sustained internal execution and improving unit economics as positives.
Independent projections cited by the reporting platform indicate analysts expect Wayfair to be profitable in fiscal 2026, with earnings forecast at $3.14 per share. The same platform’s Fair Value analysis suggests the stock may be trading above intrinsic value at current levels, adding another layer of debate for investors weighing the shares.
Operationally, Wayfair serves about 21 million shoppers across roughly 20,000 suppliers and operates a logistics network at scale while expanding a roster of AI partnerships. Truist said it adjusted its internal estimates and models alongside the revised price target to reflect the updated guidance and margin commentary.
Other brokerages have issued varying responses in recent days. RBC Capital raised its price target to $92 from $86 and maintained a Sector Perform rating, signaling recognition of the solid fourth-quarter performance but echoing concerns about potential gross-margin declines below the 30% threshold. Piper Sandler reiterated an Overweight rating with a $125 price target, pointing to market-share gains while noting a conservative first-quarter outlook. Meanwhile, JPMorgan lowered its price target to $105 from $114 but kept an Overweight rating, citing margin-pressure concerns as a primary driver.
Additional operating metrics show momentum in the United States: U.S. revenue rose 7.4% year over year, outpacing an estimated 6% gain. Adjusted EBITDA surpassed Consensus Metrix estimates by 11% and grew 133% versus the prior year, indicating improving profitability metrics even as margin trajectory remains an open question.
The range of analyst reactions underlines divergent views on Wayfair’s near-term margin outlook versus its competitive position and revenue trajectory. While several firms acknowledged the company’s operational improvements and market-share progress, margin commentary from management and the potential for below-30% gross margins later in fiscal 2026 prompted some price-target revisions and model updates.
Key takeaways:
- Truist cut its price target to $105 from $120 but kept a Buy rating, citing Q1 2026 guidance and margin comments.
- Wayfair beat fourth-quarter 2025 revenue and EPS estimates but warned gross margins could dip below 30% later in fiscal 2026.
- Analyst views vary: some raised or maintained targets citing market-share gains and improving unit economics, while others lowered targets due to margin risk.
Impacted sectors: Consumer discretionary, e-commerce, logistics.
Risks and uncertainties:
- Gross-margin pressure - Management indicated margins could fall below 30% later in fiscal 2026, which could weigh on profitability and valuation assessments.
- Below-consensus near-term growth - The company’s Q1 2026 mid-single-digit growth projection was below consensus, creating downside risk to near-term estimates.
- Valuation concerns - Fair Value analysis cited in the reporting suggests the stock may be overvalued at current market levels, introducing valuation risk for investors.