The e-commerce industry exploded last year as consumers turned to online platforms for purchases amid pandemic stay-at-home and social distancing mandates. Now, the industry is expected to grow at a sustainable pace over the long term given a change in consumer behavior and the convenience of online shopping.
Strong first-quarter performance fueled by government stimulus has led analysts to revise their forecast for U.S. retail e-commerce sales growth to 17.9% for 2021 from 13.7%. Furthermore, the surge of Delta variant infections is expected to renew investors’ interest in e-commerce stocks; indeed, brick-and-mortar stores have been witnessing reduced foot traffic lately.
Given this backdrop, Wall Street analysts predict popular e-commerce stocks ContextLogic Inc. (WISH), Overstock.com, Inc. (OSTK), and Poshmark, Inc. (POSH) will rally in price by more than 50% in the near term.
ContextLogic Inc. (WISH)
WISH operates as a mobile e-commerce company in Europe, North America, South America, and internationally. The San Francisco-based company operates a Wish platform that connects users to merchants and provides marketplace and logistics services to merchants.
On July 6, ContextLogic B.V., a wholly owned subsidiary of WISH, announced that the Dutch Central Bank had granted it a payment services license. This should allow cost savings and provide a framework to explore opportunities in the payment services space.
In June, WISH created a two-year partnership with the leading e-commerce platform, PrestaShop. Through this partnership, the company expects to enhance its offerings. According to the senior business development manager for WISH in Europe, “Partnering with PrestaShop will enable us to offer our consumers even more quality merchants and brands.”
WISH’s revenue increased 75% year-over-year to $772 million in its fiscal first quarter, ended March 31. Its gross profit stood at $437 million, up 53.9% from the same period last year. In addition, its logistics revenue grew 338% from its year-ago value to $245 million.
A $3.15 billion consensus revenue estimate for the current year indicates a 23.9% increase year-over-year. The Street expects the company’s EPS to rise 90.5% in the current year versus the last year.
Among the six Wall Street analysts that rated WISH, two rated it Buy while four rated it Hold. The $16.00 median price target indicates a potential 55.3% upside from its $10.30 last closing price. The 12-month price targets range from a low of $12.00 to a high of $24.00.
Overstock.com, Inc. (OSTK)
OSTK is an online retailer and technology company. It operates through three segments: Retail; tZERO; and Medici Ventures. The Salt Lake City, Utah-based company’s e-commerce Website sells a wide range of home products, including furniture, decor, rugs, bedding, home improvement, and more.
OSTK’s net revenue increased 3.6% year-over-year to $794.54 million in its fiscal second quarter, ended June 30. Its income from continuing operations grew 72.3% from its year-ago value to $82.41 million, while its net income improved 752.4% year-over-year to $309.91 million over the period. The company’s EPS increased 55% year-over-year to $1.72.
The Street expects OSTK’s revenues to rise 11% year-over-year to $2.83 billion in the fiscal period ending December 31. The $2.69 consensus EPS estimate for the same period indicates a 283.3% improvement year-over-year.
Shares of OSTK have gained 44.3% year-to-date and marginally over the past five days.
Each of the five Wall Street analysts that rated OSTK rated it Buy. The $127.60 median price target indicates a potential 84.3% upside from its $69.24 last closing price. The 12-month price targets range from a low of $105.00 to a high of $150.00.
Poshmark, Inc. (POSH)
POSH operates as a social marketplace for new and secondhand style products in the United States, Canada, and Australia. The company offers apparel, footwear, home, beauty, pet products, and accessories. POSH is based in Redwood City, Calif.
On August 2 POSH expanded in India to focus on new market opportunities. India is one of the fastest-growing e-commerce markets in the world and its expansion there should enable the company to attract a diverse community of shoppers and sellers to its platform.
On May 20, POSH announced a first-of-its-kind partnership with Snap, Inc. (SNAP) to launch Poshmark Mini—a bite-sized social shopping experience of Poshmark that lives inside Snapchat. This should allow POSH to expand its reach and create more engaging, dynamic, and personalized shopping experiences for consumers.
POSH’s net revenue increased 22% year-over-year to $81.76 million in its fiscal second quarter ended June 30. In addition, the company’s gross merchandise value increased 25% from its year-ago value to $449.60 million.
Analysts expect POSH’s revenues to increase 25.3% year-over-year to $328.42 million in the current year. Its revenue is also expected to increase 28.6% year-over-year in the following year, while its EPS is expected to improve 84.8% over the same period.
Of the eight Wall Street analysts that rated POSH, five rated it Buy while three rated it Hold. The $54.00 median price target indicates a potential 63.6% upside from its $33.00 last closing price. The 12-month price targets range from a low of $47.00 to a high of $67.00.
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WISH shares rose $0.01 (+0.10%) in after-hours trading Wednesday. Year-to-date, WISH has declined -46.11%, versus a 19.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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