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UPDATE: Williams-Sonoma (WSM) Momentum Slowing; Morgan Stanley Downgrades to Equalweight

August 28, 2014 7:19 AM EDT
Get Alerts WSM Hot Sheet
Price: $285.26 +0.53%

Rating Summary:
    9 Buy, 27 Hold, 7 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
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(Updated - August 28, 2014 9:32 AM EDT)

Morgan Stanley downgraded Williams-Sonoma (NYSE: WSM) from Overweight to Equalweight with a price target of $74. Analyst Simeon Gutman noted slowing momentum, and he doesn't thinks the "stock to work" in the medium term.

"While Q2 EPS was solid and in-line, we were expecting a carry-over in top-line momentum from previous quarters and comparable brand growth in the high single digits. We did not get this (Q2 comparable brand growth +5.7%), due to competition and tougher compares and now no longer believe the business will generate this level of growth in the near-term. Valuation (19x 2015e earnings) is not as supportive of a business that we now see generating low teens growth over the next 12-months.," said Simeon Gutman.

"WSM had been beating estimates for the past few quarters, which widened the earnings growth/valuation spread for this name. While the stock is quoted down 11% in the aftermarket, the spread is still in place -- WSM trades at 19x forward estimates and is slated to grow EPS in the low teens over the next 12-18 months," added the analyst.

For an analyst ratings summary and ratings history on Williams-Sonoma click here. For more ratings news on Williams-Sonoma click here.

Shares of Williams-Sonoma closed at $74.89 yesterday.



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