Shares of the home furnishings and décor e-tailer Wayfair (NYSE: W) retreats almost 10% after the stock spiked more than 50% from the last Thursday’s closing. The stock dropped another 4% in midday U.S. trading Wednesday While the stock regained some of its vitality before the end of the day after the recent correction.
However, Investors continued to show buying interest in Wayfair shares in the coming days, following the company’s recently announced plans to drive cost efficiencies by cutting 1,750 employees. The company said the reduction of 1,750 employees - including 1,200 in corporate positions - will save about $750 million a year. The new layoffs come just months after the online furniture retailer cut 870 jobs last August.
“The changes announced today strengthen our future without reducing our total addressable market, our strategic objectives, or our ability to deliver them over time” - Wayfair CEO, Niraj Shah said.
The stock also received additional buying pressure after the stock rating was upgraded by big US investment banks. J.P. Morgan analyst Christopher Horvers raised his rating on the stock to Overweight from Underweight. He changed his target for the stock price to $63 from $35. BofA analysts also upgraded Wayfair from Underperform to Buy. And they increased the price target from $30 to $65.
“We are upgrading Wayfair to Overweight from Underweight given a positive shift in market share trends and management’s newfound commitment to controlling expenses/investments” - JP Morgan said.
Wayfair(W) short-term technical outlook
In the short-term, if the stock continues the short-term bullish momentum, then the immediate resistance above $60 breaks and closes above this resistance level then expects the market to zoom up to $65.50 and $73/75. On the downside, the crucial support remains the previous session low of $50, in case the stock break this area, below which the slide could further get extended towards the $44/43 area.
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