William Blair analyst Dylan Carden has maintained their bullish stance on WRBY stock, giving a Buy rating on August 1.
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Dylan Carden’s rating is based on Warby Parker’s strong financial performance and promising future outlook. The company reported sales growth that exceeded expectations, driven by an increase in customer numbers and higher spending per customer. Although the adjusted gross margin was in line with expectations, the adjusted EBITDA surpassed forecasts by 15%, showcasing the company’s operational efficiency.
Management has also raised its sales and adjusted EBITDA expectations for the full year, indicating confidence in continued growth. The anticipated sales growth is now projected to be between 14% and 15%, with adjusted EBITDA margins expected to improve. Despite a relatively high valuation, the company’s earnings growth justifies this, with a projected 35% increase this year. Additionally, the removal of the Home-Try On program is expected to enhance operating leverage. While the resignation of the CFO is a concern, the brand’s strong momentum is likely to attract a capable replacement. The primary risk identified is any potential decline in gross margin, which is crucial for maintaining operating leverage.
In another report released on August 1, Telsey Advisory also maintained a Buy rating on the stock with a $28.00 price target.