Williams-Sonoma Stock Could Surge in 2022, Says Analyst

The stock is up nearly 70% this year

Deputy Editor
Dec 22, 2021 at 2:01 PM
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The shares of Williams-Sonoma, Inc. (NYSE:WSM) are up 2.6% at $172.32 this afternoon, following a morning upgrade from Loop Capital. The analyst raised its rating on the stock to "buy" from "hold," noting that a rise in Covid-19 cases could drive up sales well into 2022, as the housing market continues to strengthen. Loop Capital called Williams-Sonoma the "the nation's premier multi-brand, omni-channel retailer," adding that it's unique in its sector.

The stock recently pulled back to the $160 mark, but looks to be staging a bounce off the region. However, this pullback has WSM breaking down past the 200-day moving average for the first time since April 2020, and this trendline is keeping some of the stock's gains in check today. For the year, WSM has added over 69%. What's more, the stock's 14-day relative strength index (RSI) sits deep in "oversold" territory at 18, indicating a short-term bounce might be in the cards. 

wsm dec 22

On the analyst front, the stock sports a 12-month consensus price target of $211, which is a 22.4% premium to current levels and sits just below the stock's Nov. 23 record high of $223.32. Meanwhile, 15 of the 20 in coverage called WSM a "hold" or worse heading into today, which could be indicative of even more bull notes on the horizon. 

Short sellers are hitting the exits, but it looks like a further unwinding of these bearish bets could create additional tailwinds. The 5.10 million shares sold short make up 6.9% of the stock's available float, and would take over a week to buy back, at WSM's average daily pace of trading. 

Now could be a good time to get in on the stock's next move with options. Williams-Sonoma stock's Schaeffer's volatility index (SVI) of 44% stands higher than just 28% of readings from the past year. This implies options traders are pricing in relatively low volatility expectations at the moment. 

 




 
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