Wayfair is becoming "too tough to defend" as the company continues to burn through cash, Piper Sandler said. Analyst Peter Keith downgraded the stock to neutral from overweight on Thursday, citing the furniture retailer's uncertain sales outlook and the likelihood of EBITDA losses and negative free cash flow for the year. "While we continue to see healthy long-term potential for Wayfair in the home furnishing space, we believe investors have no patience for negative EBITDA and negative FCF companies in the current environment," he said in a note. Keith cited a slew of reasons for the downgrade, which included waning positive supplier feedback and skepticism toward the company's reported market share gains. "So market share can be looked at by dollars or by orders, and Wayfair's order volumes remain suspect, which is inline with the feedback we hear from suppliers due to the knockoff effect of Wayfair raising prices," he wrote. Meanwhile, Keith views the retirement of long-time CFO Michael Fleisher in January 2023 as seemingly "well-planned and thought-out" but yet another reason to hold off buying the stock. Piper Sandler slashed its price target on the furniture retailer to $65 from $200 a share, which implies a 3.6% downside from Thursday's close price. Shares of Wayfair have plummeted 64.5% this month and 12.3% since the start of the week. — CNBC's Michael Bloom contributed reporting
Niraj Shah, Wayfair CEO
Ashlee Espinal | CNBC
Wayfair is becoming "too tough to defend" as the company continues to burn through cash, Piper Sandler said.