Wayfair's (W) Q4 sales are likely to be "flattish" but ahead of consensus estimates and Q1 sales guidance to be flat to slightly up, indicating a potential acceleration in growth, UBS Securities said in a note emailed Thursday.
The firm said that it believes the company has significant opportunities to improve profitability in 2025 through cost-cutting measures and increased operational efficiency while recovery in high-end home furnishings sales is a positive sign that will eventually extend to other market segments.
The closure of Wayfair's German business is expected to have a minor impact on sales and while most of the savings will be reinvested in other areas of the business, the company could still put some savings towards its earnings, UBS added.
The company is well-positioned to handle tariffs on Chinese goods due to its marketplace model and diversified supplier base, and options include passing along costs to consumers or shifting sourcing, according to the note.
Wayfair is set to release its Q4 financial results on Feb. 20.
UBS has a buy rating on Wayfair's stock with a $60 price target.
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