Wayfair (W) Gains as Wells Fargo Pokes Holes in the Bear Case

Shares of short-target Wayfair (NYSE: W) had a strong day Monday in part related to positive comments from Wells Fargo analyst Matt Nemer following meetings with management.

Nemer expects the stock to remain volatile in the near term given the "small float and intense tug of war between institutional bulls and “newsletter” bears", but addresses some holes in the bear case.

Specificallly, the analyst said the bears failed to address two unique advantages: vendor commitment to the platform (they love Wayfair), and the back end “vendor extranet” software which allows for a 98% fill rate and 2-day ship times on millions of items that usually take weeks. He also also notes that, ironically, the bear reports fail to mention that there is little to no stock available to borrow.

Further, the analyst said the one area they felt Wayfair has been lacking (loyalty) was addressed last week with the announcement that it will launch a private label credit card with Alliance Data Systems (ADS).

"Wayfair is the fastest growing public company in all of U.S. consumer and trades at only 1.0x FY16 sales vs. high growth consumer peers at 2.7x," the analyst said.

The firm reiterated an Outperform rating and valuation range of $53-$55.

For an analyst ratings summary and ratings history on Wayfair click here. For more ratings news on Wayfair click here.

Shares of Wayfair last traded up 5.4% to $38.14.

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