Analysts Not Convinced After Williams-Sonoma's Strong Earnings

No less than seven brokerages have lowered their price targets so far

Digital Content Manager
May 26, 2022 at 9:28 AM
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The shares of Wiliams-Sonoma, Inc. (NYSE:WSM) are up 8.7% at $125.00 ahead of the bell, following the cookware retailer's first-quarter earnings report. Williams-Sonoma posted profits of $3.50 per share on $1.89 billion in revenue, topping analysts' estimates. Its same-store sales growth also tripled forecasts, and the company reiterated its full-year guidance, as it expects profit margins will remain stable. 

Analysts aren't so convinced. So far, at least seven brokerages have cut their price targets, including Jefferies by $35 to $130, after it warned on an "increasingly competitive environment." J.P. Morgan Securities also lowered its price objective to $114 from $120, noting that its consensus sales forecast is now looking harder to beat as demand begins to moderate. 

Still, the 12-month consensus price target of $149.35 is a healthy 30% premium to last night's close. Heading into today, however, the brokerage bunch was lukewarm, with five "buy" or better recommendations, compared to eight "holds," and two "sell" or worse ratings. 

Short sellers were swarming Williams-Sonoma stock ahead of its earnings event, rising 24% in the last two reporting periods. The 11.52 million shares sold make up 16.7% of the stock's available float, or nearly eight days' worth of pent-up buying power.

Like much of the market, its been a rough road for WSM, which has caved to pressure at its 20-day moving average during the past month-and-a-half. However, the equity could topple this trendline today, should these gains hold, as it chips away at its 32% year-to-date deficit. 

 

 

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