Investing.com -- Citi downgraded Warby Parker Inc (NYSE:WRBY) to "Sell" from "Neutral" given valuation concerns despite expectations of a strong fourth-quarter performance.
The eyewear retailer’s stock has surged 50% in the past three months, pushing its valuation to about 29 times Citi’s estimated 2025 EV/EBITDA, a level the bank sees as overextended.
“While we expect a strong 4Q24 with sales beating estimates, the stock has risen 50% over the past 3 months to a level we believe is overvalued,” analyst at Citi said.
Citi expects Warby Parker’s Q4 sales to rise 16.5%, exceeding consensus estimates of 15.6%, the firm flagged concerns over weaker store sales volumes and a decline in customers per store since 2022.
The bank raised its 2025 revenue growth forecast to 15% from 12.4%, reflecting stronger customer and sales-per-customer growth. Citi also increased its price target to $23 from $19 but warned that risk-reward dynamics remain unfavorable.
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