The big picture issues facing the economy may be swallowing up furniture retailer Wayfair , according to Wells Fargo. Analyst Zachary Fadem downgraded Wayfair to underweight from equal weight, saying in a note to clients on Thursday that higher interest rates and the potential for a slowing economy could be bad news for a stock tied to the consumer confidence and the housing market. "Inflation is accelerating, the Fed is hawkish (yet falling behind), and conventional wisdom suggests a recessionary scenario could render macro sensitive stocks increasingly difficult to own under a narrative of multi-year demand pull forward, spiking mortgage rates, and deteriorating consumer sentiment," Fadem wrote. Shares of Wayfair have already dropped more than 40% year to date, but the near term future for the business is still cloudy, creating potential for further downside. "We see waning demand visibility, optimistic Consensus estimates, and a host of competitive, demographic (i.e. lower-income exposed, ecom normalization), and positioning-driven challenges," Fadem wrote. Wells Fargo lowered its price target on Wayfair to $100 per share from $110. The target is about 6.5% below where the stock closed on Wednesday. —CNBC's Michael Bloom contributed to this report.
Niraj Shah, CEO, Wayfair
Ashlee Espinal | CNBC
The big picture issues facing the economy may be swallowing up furniture retailer Wayfair, according to Wells Fargo.