Wayfair (NYSE:W) shares rose more than 2% pre-market today after UBS upgraded the company from Neutral to Buy, along with raising the price target from $72.00 to $110.00.
The analysts explain that Wayfair’s current low valuation does not fully reflect its favorable outlook in the intermediate term. The analysts believe that investors will be pleasantly surprised by the significant increase in profits that Wayfair is expected to achieve in the upcoming periods.
The analysts predict that Wayfair is on the brink of entering a multi-quarter phase where it will experience both sales and profit growth. As a result, the company’s valuation multiple, currently at 1.0x EV/Sales, is likely to rise to at least its historical average of 1.2x EV/Sales, and possibly even higher.