Cowen Affirms Wayfair (W) at 'Outperform' Following Q3 Results, Outlook

Cowen and Company maintains an Outperform rating and $31 price target on Wayfair (NYSE: W) following Q3 results reported on Monday night.

Analyst John Blackledge noted that revenue of $336 million came in $33 million above the firm's estimate, while adjusted EBITDA of negative $18.3 million was in-line with the firm and about 4 percent below consensus.

Blackledge commented, W's customer count rose to 2.86MM, up 61% y/y and 9% q/q, ~1% below our 2.90MM forecast. Rev/customer was strong and increased to $342, up 9% y/y and 3% q/q, and ~4% above our estimate driven by higher frequency of orders and leverage from return customers. Orders delivered were 1.3MM, up 49% y/y, and 10% above our forecast, driven by improved orders/customer (LTM orders / active customers) of 1.65 vs. 1.55 the prior year. No update on mobile orders customers as % of total or orders from repeat customers, mgmt noted they will provide those metrics periodically over time.

Updated estimates: We increased our forward estimates to account for the 3Q14 revenue beat and the 4Q14 guide. For 4Q14, we raised Direct Retail revenue to $302MM (+35% y/y) from prior $293MM (+31% y/y), near high end of guide of $295-305MM. We tweaked the Active Customer count higher to 3.08MM (vs. 3.06MM prior) and revenue per active customer to $344 (vs. $334 prior) given upside in 3Q14. We kept Other revenue unchanged, as a result, total revenue rises to $365MM (vs. $356MM prior), up 24% y/y. 4Q14 Adj. EBITDA of ($18MM) remains largely unchanged, implying margin of -5% and in-line with EBITDA margins guide of -4.5% to -5.0%, as we expect higher revenue upside to be offset by slightly higher S&M expense. We modestly raised our revenue forecast in '14 and longer-term to account for better topline trends, but profit metrics remain largely unchanged.

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

Wayfair closed at $28.10 yesterday.

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