Wells Fargo Initiates Coverage on Williams-Sonoma (WSM) with a Market Perform; Strong Portfolio of Brands in Slow-Moving Sector

October 6, 2009 4:57 PM EDT

Wells Fargo initiates coverage on Williams-Sonoma, Inc. (NYSE: WSM) with a Market Perform rating. Valuation range of $17 to $18.

Wells analyst says, "Home furnishings has been one of the hardest hit sub-sectors of retail, with a 13% reduction in stores since 2007. We see a slow recovery for even the best in class operators, as housing turnover and access to credit remain depressed, and categories like housewares become more competitive in the mass channel and online. In that context, we believe Williams-Sonoma has a strong portfolio of brands, one of the best multi-channel platforms in retail, and a solid balance sheet. That said, we think top-line growth could be challenging as the core brands mature, catalog circulation is reduced, and consumers continue to shy away from aspirational purchases. WSM shares are building in a recovery and are currently trading 7% above historical multiples on an EV/EBITDA basis. We would wait for more holiday visibility or a pullback in the shares before getting more constructive."

To see more analyst ratings on WSM Click Here.

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