Wayfair Inc. (NYSE: W) is a niche e-commerce player that has become quite popular, while its shares have been quite volatile since its initial public offering (IPO) in October of 2014. Now one analyst says it is time to buy the stock.

Bank of America Merrill Lynch has raised Wayfair to Buy from Neutral. Wayfair’s new price objective of $45.00 implied some 28% upside from Friday’s closing price of $35.21. What stands out as peculiar in this analyst report is not just that the shares rose almost 7% to $37.59 after the upgrade on Tuesday, it was that the firm’s prior price objective was $54.00 while it had a Neutral rating.

24/7 Wall St. has been warning its readers since mid-August that the only thing you can count on now is that analysts are almost certain to lower their price targets on most stocks they cover, even if they maintain positive ratings. If a traditional stock has 8% to 15% upside in most Buy-rated stocks, they cannot just stick by an old high target price if the underlying shares sell off by 20%.

Merrill Lynch’s Paul Bieber and Justin Post made the ratings call on Tuesday. They have said that Wayfair is well-positioned to offer a highly differentiated e-commerce shopping experience with over 10 million available items. The team there is positive on Wayfair’s revenue growth, as well as its total market opportunity. Further, they like that it is an order taker and fulfillment outfit, so no inventory more or less, with a high mobile exposure and an opportunity to increase its brand awareness.

One of the driving forces behind the formal upgrade has been the pullback. That is why you saw an upgrade on the rating but a downgrade on the price target. Again, Wayfair has been volatile.

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Selling pressure came after the earnings report for the second quarter. Another added pressure was a short-seller report from Citron. Shares had been down roughly 40% since August 13. The estimates ahead now appear to be conservative and with another quarter of easy growth comparables.

Another driving force for this Wayfair upgrade is that macroeconomic tailwinds support the category. The Merrill Lynch team also expects that the short-selling reports overlook several important factors.

On why the firm lowered its price objective, Bieber and Post said in their report:

We are lowering our price objective to $45 (from $54) on a lower 1.3-times 2016 EV/Sales multiple (versus 1.6-times previously). We lowered our multiple due to sector multiple compression recently. Our $45 price objective is also supported by our discounted cash flow analysis that assumes 10% long term EBITDA margins. Our 1.3x target multiple is a premium to Wayfair’s eCommerce comparable group at 1.0-times and Wayfair’s retail comp group at 1.1-times but in-line on 2017 estimates given stronger growth.

Merrill Lynch also pointed out that the company is unprofitable, but it sees a solid one-year payback. It showed that in the second quarter Wayfair spent about $65.00 to acquire a customer that spends about $357 per year, which generates roughly $74 in contribution profit or about 21% contribution margin.

Wayfair closed up 6.7% at $37.59, against a post-IPO range of $16.74 to $56.84. As a reminder, Wayfair’s IPO price of $29.00 was above the $25.00 to $28.00 per share.

If you want to see just how impacting the short interest is here from before and after the short selling reports have come out, the Nasdaq short interest webpage showed that the short interest has been between 9.6 million and 9.9 million shares since July. The current average volume is about 1.2 million shares, and Tuesday’s volume was just over 1.8 million shares.

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