Wayfair (NYSE: W ) shares are moving higher in premarket Friday after MoffettNathanson analysts upgraded the stock to Market Perform from Underperform.
The analysts are moving to the sidelines after analysis of recent web traffic data “strongly” suggested that Wayfair is experiencing a material benefit from the recent Bed Bath & Beyond (OTC: BBBYQ ) bankruptcy.
“We believe Wayfair is benefiting in two clear ways: First, as Bed Bath and Beyond stepped out of the paid search auction, Wayfair’s declining search trends bottomed out, almost immediately. Second, that uptake in search share is likely leading to faster bottom of the funnel conversion to sales,” they said in a client note.
Even more positively, the analysts see signs of prolonged benefits from the bankruptcy. More precisely, Wayfair could experience “four to six quarters of category outperformance and a mid-single-digit revenue tailwind as it captures a portion of the $5.3B in Bed Bath and Beyond sales up for grabs.”
“Improving demand from BBBY’s bankruptcy, our above consensus view of operating profitability, and a recent debt maturity extension is a tough narrative to fight as an Underperform,” they concluded.
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