©Reuters.Williams-Sonoma (WSM) stock receives two upgrades in Q4 results
Shares of Williams-Sonoma (NYSE:) received an upgrade from underweight to equal weight by Morgan Stanley analysts, who say the company's “ability to maintain margins in a weak demand environment is undervalued.” Ta.
Analysts also raised their price target for WSM from $155 to $270 and also raised their estimates for fiscal 2024 and 2025.
“WSM appears to have passed its peak in sales and margins, giving us greater appreciation for the business's ability to generate operating leverage amidst weak demand,” the Morgan Steinley team wrote.
In particular, analysts predict positive changes in the home furnishings sector, expecting stability and growth after the downturn. They expect the category's growth rate to be flat to mid-single digits in 2024 and 2025, followed by a 5.5% decline in 2023.
EBIT margins are expected to remain strong in the mid-to-high teens, and a return to mid-single-digit EBIT growth seems achievable.
Meanwhile, Goldman Sachs also upgraded WSM from “sell” to “neutral.” Analysts at the major banks said consumer retail “has been able to maintain strong margins, with stronger-than-expected trends in both the fourth quarter and the outlook for 2024.” .
Goldman also raised its price target to $263 from $154.
