Morgan Stanley downgrades Wayfair to Underweight, cuts target to $65

Morgan Stanley analyst Simeon Gutman downgraded Wayfair to Underweight from Equal Weight with a price target of $65, down from $75. The stock closed Friday down $2.19 to $80.14. Wayfair's fundamentals deteriorate when the market is less tolerant of unprofitable online retailers, Gutman tells investors in a research note. Further, he believes a recovery at the company may be prolonged due soft near-term trends and macro risks. As such, the stock's risk/reward "skews negative," Gutman says. Further, the analyst's analysis suggests the stock's "true bear value is lower than perceived." He believes the market is pricing in greater stabilization in 2020 revenue trends and a faster path to profitability than he expects for Wayfair. Channel checks suggest the company's revenue growth is still decelerating, and macro headwinds are rising, the analyst contends.