Williams-Sonoma Poised For Over 50% Upside On Housing Rebound Hopes: Analyst
Williams-Sonoma, Inc. (NYSE:WSM) saw several analysts reiterate their coverage, with one analyst making a modest reduction to the price forecast following Thursday's first-quarter results.
The retailer reported revenue of $1.73 billion, a 4.2% increase from the same quarter last year and ahead of Wall Street's estimate of $1.67 billion. GAAP earnings per share of $1.85 beat the analyst consensus estimate of $1.77.
Williams-Sonoma maintains its fiscal 2025 and long-term outlook despite absorbing higher costs from the current tariff landscape. It emphasized that its guidance does not account for additional future tariffs and may be revised if material changes occur.Williams-Sonoma expects fiscal 2025 net revenue to range between -1.5% and +1.5%, with comparable sales flat to up 3.0%.
RBC Capital Markets analyst Steven Shemesh lowered the price forecast to $182 from $189 while keeping an Outperform rating.
While first-quarter comps and headline operating margin outperformed expectations, investor concerns centered around the roughly 220 basis point headwind in merchandising gross margin, Shemesh noted.
Shemesh views much of this impact as temporary and expects improvement beginning in the second quarter. Consequently, the analyst revised the second quarter comp estimate to +1.2% (from -1.5%) and raised the adjusted EPS forecast to $1.81 from $1.74.
For 2025 and 2026, the analyst now projects comp sales growth of +1.1% and +2.6%, respectively (vs. +0.1% and +4.6% previously), and adjusted EPS of $8.33 and $9.10 (vs. $8.36 and $9.46 prior).
KeyBanc analyst Bradley B. Thomas reiterated an Overweight rating with a price forecast of $181.
The analyst says despite a challenging industry environment, the company delivered solid first-quarter results, with comparable sales and earnings per share surpassing expectations.
The analyst remains positive on Williams-Sonoma's long-term outlook, driven by ongoing market share gains, a robust balance sheet, and sustainably elevated margins.
The analyst asserts that the company is well-positioned for an eventual housing recovery, with a potential over 50% upside in its shares within the next two to three years.
Thomas now estimates EPS of $1.71 (vs. $1.73 prior) for the second quarter, $1.87 (vs. $1.83 earlier) for the third quarter, and $3.02 (vs. $2.96 prior) for the fourth quarter of 2025.
Also, the analyst raised full-year 2025 EPS estimates to $8.44 (from $8.20) and 2026 EPS estimate to $8.75 (from $8.40).
Telsey Advisory analyst Cristina Fernández maintained an Outperform rating with a price forecast of $215.
The analyst views Williams-Sonoma's quarterly performance as solid. However, year-over-year comparisons for gross and operating margins appear weaker due to a one-time adjustment in the first quarter of 2024.
Guggenheim Securities analyst Steven Forbes kept a Neutral rating and writes that while the company's ~75 bps gross margin miss in the first quarter drew investor focus, the return to positive furniture comps (first since fourth-quarter 2022) is notable.
The analyst notes that all brands posted positive one-year comps for the first time since the second quarter of 2022, and multi-year comp trends improved across key banners. Forbes says this supports management's outlook to return to top-line growth in 2025.
Having now accounted for the pressure from tariff-related margin headwinds, the analyst, by and large, is sticking to previous estimates.
Price Action: WSM shares are trading lower by 1.16% to $158.53 at last check Friday.
Read Next:Photo via Shutterstock
Date
Firm
Action
From
To
Mar 2022
Wells Fargo
Maintains
Equal-Weight
Feb 2022
Gordon Haskett
Upgrades
Hold
Accumulate
Jan 2022
RBC Capital
Upgrades
Sector Perform
Outperform
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