WRBY: Margin Expansion And 2025 Profitability Progress Will Drive Renewed Bullish Conviction

Analysts have nudged their blended price target for Warby Parker modestly higher, from approximately $22.17 to $22.45 per share. Stronger margin and growth assumptions have offset recent target cuts tied to slowing revenue trends and heightened uncertainty around the pace of top line expansion.

Analyst Commentary

Street research following the latest quarterly update reflects a growing divide between optimism on Warby Parker's profitability trajectory and concern over the durability of its growth profile. Recent target cuts cluster in the high teens to high twenties, signaling that while the story remains attractive to some, the margin for execution error has narrowed.

Bullish Takeaways

• Bullish analysts highlight stronger than expected adjusted EBITDA and reaffirmed full year profitability guidance as evidence that the company is gaining operating leverage even as revenue growth moderates.
• They view the higher absolute targets in the mid to high twenties as justified by Warby Parker's differentiated brand, expanding store base, and a still underpenetrated category that can support mid teens growth over time if traffic normalizes.
• Supportive views argue that the current pullback already prices in a slower near term top line, creating potential for multiple expansion if management demonstrates more consistent comp and customer acquisition trends.
• Some see the ongoing focus on efficiency and margin discipline as a positive signal that management can protect valuation even in a softer discretionary spending environment.

Bearish Takeaways

• Bearish analysts emphasize the late quarter slowdown in younger customer engagement and the expected persistence of softer demand into the next quarter, which raises questions about the company's ability to deliver sustained mid teens revenue growth.
• They argue that the premium multiple is harder to defend if the business is transitioning from a high growth profile to a more moderate trajectory, compressing upside in valuation despite improving margins.
• There is heightened concern that retail economics could face pressure if traffic and conversion do not rebound, particularly as store investments and fixed costs remain elevated.
• Some caution that increased uncertainty around the growth algorithm could lengthen the timeline for any material re rating, keeping the stock range bound until Warby Parker produces several quarters of more consistent top line execution.

What's in the News

• Warby Parker updated its full year 2025 guidance, projecting net revenue of $871 million to $874 million, which implies approximately 13% year over year growth (company guidance).

Valuation Changes

• Fair Value: risen slightly from $22.17 to approximately $22.45 per share, reflecting modestly more constructive assumptions.
• Discount Rate: increased marginally from about 8.44% to 8.56%, signaling a slightly higher required return on equity risk.
• Revenue Growth: nudged higher from roughly 12.94% to 13.24%, indicating a small upgrade to long term top line expectations.
• Net Profit Margin: improved from about 8.36% to 9.01%, pointing to better anticipated operating efficiency and profitability.
• Future P/E: declined from approximately 34.8x to 32.5x, suggesting a modestly lower valuation multiple applied to forward earnings.