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Loop Capital’s estimate for adjusted EBITDA in 2024, at $385 million, currently stands 14% lower than the consensus. Analysts at Loop Capital believe that the stock has already priced this in, with a month-to-date decline of 16%.
“Our bearish thesis has been that growth at W is funded by debt, and the cost of debt has increased significantly. The organic sales trend for home goods continues to decline following the COVID-related boom. It’s unclear to us when home furnishings will be a growth industry again, but at this share price we see risk-reward evenly balanced,” write the analysts at Loop Capital in a note.
Loop Capital expects revenue to start growing this quarter, with some fluctuations due to changing comparisons. The return of student loan repayments is seen as a significant challenge for the second half of the year, resulting in a projected 1% sales decrease for 2023. They anticipate a 5% year-over-year growth for 2024.
Wayfair is expected to generate a positive FCF of $9M in 2024, following a cash burn of $200M this year. While the company could potentially manage the $117M debt maturing in November 2024 and the $37M maturing in April 2025 from its current cash balance, analysts at Loop Capital believe the $754M due in October 2025 will likely be refinanced.
Shares of W are up 2.08% in early trading Monday morning.
