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Warby Parker analyst downgrades the stock, citing 'fading confidence'

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Yahoo Finance Live anchors discuss why one Goldman Sachs analyst has downgraded shares for glasses retailer Warby Parker.

Video Transcript

BRAD SMITH: We got to check in on shares of eyeglass seller, Warby Parker. I believe Jared Blikre is a fan of Warby Parker, or at least, wears them, sports them. They've plummeted over 60% this year, spurring Goldman topped downgrade. Goldman, they downgraded the company this morning, citing fading confidence here. And they're downgrading WRBY, ticker symbol there for Warby, to neutral from buy. They're also lowering their 12-month price target to $18 from $34 as well.

BRIAN SOZZI: Yeah, interesting note here, guys. The analyst, Brooke Roach, over at Goldman saying, quote, "We have fading confidence in the outlook for revenue outperformance and timeline to underlying profitability, following several earnings releases where, essentially, results were under pressure." And you go down to Brooke's model at the bottom of the page. She barely sees Warby Parker being profitable on an operating profit basis next year.

And that is a completely counter story compared to what we heard being pitched at the time that Warby Parker direct listing last year, mainly that all our eyes are getting weaker, especially during the pandemic. We're either going to need two things-- contact lenses or $100 glasses, both of which that Warby Parker sells. Right now, that thesis is really being challenged, especially after the company's quarter they reported this week.

JULIE HYMAN: Yeah, and I thought it was also interesting that she acknowledged she was wrong. In short, we acknowledge our call was wrong. It's always tough when, as an analyst, you've got a buy equivalent rating on something, and it keeps going down. And there are two kinds of analysts. There are the kinds that stick to their guns and say, now is a better time to buy than ever. And then there are the kinds that acknowledge the reality of the situation and say, we didn't get this one quite right.

BRIAN SOZZI: Well, Julie, I used to never acknowledge anything. I was always right.

JULIE HYMAN: Used to? All right, let's move on, Brian Sozzi.