3 Reasons Goldman Sachs Is Bullish On Warby Parker

Warby Parker Inc (NYSE: WRBY) shares were higher by 4.5% on Monday after Goldman Sachs initiated bullish coverage of the stock.

The Analyst: Goldman analyst Brooke Roach initiated coverage with a Buy rating and $72 price target.

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The Thesis: Warby Parker launched back in 2010 as a pure online retailer of prescription glasses and sunglasses, but it has since expanded to a physical retail footprint.

In the initiation note, Roach said Warby Parker is relatively well-positioned to navigate key investor concerns surrounding supply chain disruptions, freight and potential growth headwinds in the first half of 2022.

She listed three reasons she likes the stock as a long-term omnichannel healthcare play:

1. Warby Parker has grown its brick-and-mortar presence.
2. It has opportunities to gain market share and wallet share.
3. The company has opportunities to channel shift and implement structural changes that can increase leverage and profit margins.

“We view WRBY as a high-growth omnichannel brand with exposure to the structurally growing vision care market,” Roach said.

Goldman is projecting Warby Parker will swing from a $95.3 million net loss in 2021 to a $22.9 million profit in 2022. Roach is forecasting 18 cents in adjusted EPS in 2022 and $726.9 million in revenue, up from $549.3 million in 2021.

Roach said the vision industry is generating reliable, consistent growth for investors. In fact, 76% of adults utilize some type of vision correction. Roach said an aging population and increased screen time will likely increase demand for vision care in the longer term.

Benzinga’s Take: Given Warby Parker’s impressive growth, valuable brand and favorable long-term positioning, the stock looks like it has a bright future at this point. The only thing that may give investors pause is its valuation with the stock currently trading at 11.7 times sales.

Photo: Scott Akerman via Flickr