Last October 21, 2024, I alerted MPTrader members to a Goldman Sachs upgrade of optical products retailer Warby Parker (WRBY) to Buy from Neutral. Goldman attached an 18.00 target price to the stock. At the time of my post to members, WRBY was trading at 17.55 in reaction to the GS upgrade, up 6% from the prior close, and just 2.5% from Goldman's 12-month target price.
After examining my near and intermediate-term technical and pattern setup work, however, I concluded that despite a very high valuation (P/E = 72), WRBY nonetheless exhibits considerably more upside potential than Goldman indicates from its fundamental analysis.
Below is what I discussed with MPTrader members about WRBY's technical setup on October 21, 2024:
WRBY (Warby Parker)— Early this morning, Goldman Sachs upgraded WRBY to Buy from Hold and increased its Target Price to 18 from 15. One look at my attached BIG Picture Daily chart indicates to me that WRBY exhibits a potentially explosive, huge 2-1/2 year base-accumulation setup that belies the Goldman Sachs 12-month $18 target. Based on my work, if WRBY closes at 18, my work will trigger a next higher intermediate-term Target Zone of 27 to 29! That said, from a tactical trading perspective, anyone interested in establishing a long position in WRBY should plan to stick around at least six months, and also place a stop-loss on a violation of the up-sloping 200 DMA, now at 14.50... Last is 17.55...
My attached current Daily Chart shows that after my October 21, 2024 alert to MPTraders at 17.55, WRBY embarked on a powerful upleg that hit a bull run high of 28.68 on 1/31/25, a gain of 67%, right in my technical target window of 27 to 29, and 59% above Goldman's Upgrade and Target Price of 18!
In the past 6 weeks after hitting a 2-1/2 year new high at 28.68, WRBY has relinquished over 30% of its value in an intense 60% correction of August 2024-January 2025 upleg.
My work is flashing important signals that WRBY's major correction that has returned the price structure to the level of its original October-November 2024 upside breakout plateau (17.00-18.60) is developing a downside exhaustion condition ahead of a resumption of its intermediate-term bull phase.
Granted, the technical setup belies a clouded fundamental perspective that questions the strength of the US consumer and this particular discount retailers' endurance during a stressful transition from the Biden to Trump policy prescriptions.
Be that as it may, my Big Picture technical work argues that WRBY has unfinished business on the upside that has the potential to take out its January high (28.68) en route to 33 to 35 thereafter.
From a tactical perspective, my nearest-term work cannot rule out a retest and marginal violation of the 200 DMA, now at 19.35, before a sustained powerful advance emerges. As long as WRBY avoids a closing break of 16.50, my work will remain technical "friendly" to the establishment of an exhaustion reversal low in the days directly ahead... Friday's close (3/14/25): 20.45...
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