Wayfair Inc. (W): Furnishing the Credit Upside

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Wayfair Inc. (W): Furnishing the Credit Upside

Foundation

June 24, 2026 06:46 PM GMT

Morgan Stanley & Co. LLCMRetail Credit Research | North America Jenna L Giannelli

Credit analyst

Wayfair Inc. (W): Furnishing the Jenna.Giannelli@morganstanley.comRoopi Bhangu +1 212 761-4340

Credit Analyst

Roopi.Bhangu@morganstanley.com +1 212 761-1912

Credit Upside

We initiate credit coverage on Wayfair with a constructive

fundamental view, see valuation as attractive, and recommend

buying the secured notes. The bonds trade wide to the BB index

despite secured collateral, while EBITDA growth and

deleveraging should drive spreads to or through BB levels.

Key Takeaways

Constructive fundamentals: revenue +7% in 1Q and FY26E EBITDA of ~$802mn

support deleveraging.

Credit repair is visible: we expect FCF of ~$497mn in FY26E, or ~17% of debt,

with net leverage moving toward ~1.8x.

Valuation looks cheap: we recommend buying W secured notes, which trade wide

to the BB index despite first-lien / secured collateral.

Curve view: we recommend buying the 2030s/2032s; 2029s for lower beta /

short duration accounts and 2034s add spread for duration-tolerant accounts.

Key risks are discretionary home demand, tariff/freight pressure, and incremental

convertible note maturities in the next two years.

Exhibit 1: Wayfair Inc. (W) – summary of views

Fundamental Outlook Constructive

Valuation View Cheap

Trade Recommendation Buy secured notes

Preferred Curve Position Buy 2030s / 2032s; own 2029s for lower beta

Target Trade to / through BB index (~145-155bp OAS)

Source: Bloomberg, Morgan Stanley Credit Research

Exhibit 2: Trade recommendation thesis and secured note rationale

Theme Evidence Credit implication

40mn+ products, ~20k suppliers, national logistics