Wayfair (W) shares hit a 52-week low on Wednesday after a Wedbush note downgraded the stock and called the online furniture retailer's 2021 results "underwhelming."
"While there has been plenty of noise associated with the impact of the pandemic, we have repeatedly pointed to 'yellow flags' in KPIs [key performance indicators] that have been trending below pre-pandemic levels, namely in gross and net customer adds, customer acquisition costs and orders per customer," Wedbush analyst Seth Basham wrote in a note to investors.
The analyst downgraded Wayfair to Neutral from Outperform, with a price target cut to $160 from $290. The stock was trading at around $176 late Wednesday morning.
In his note, Basham pointed out the online retailer has suffered even though consumers might be more likely to shop online than in-person amid the recent COVID surge.
"We believe pressure has intensified due not only to softer category sales trends in December (and despite consumers’ renewed reluctance to shop at stores due to Omicron), but also due to a less attractive value proposition and supply chain challenges," he noted.
Wayfair shares closed down more than 8% on Wednesday, following a decline a day earlier amid an overall sell-off in tech and growth stocks. Wells Fargo also recently slashed its price target on Wayfair to $195 from $250.
The online furniture retailer's stock declined about 18% in 2021, compared to an increase of 144% in 2020 during worldwide lockdowns amid the pandemic.