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UPDATE: Oppenheimer Upgrades Williams-Sonoma (WSM) to Outperform on Strength in Home-Related Sales

June 12, 2015 6:55 AM EDT
Get Alerts WSM Hot Sheet
Price: $318.26 +1.35%

Rating Summary:
    9 Buy, 27 Hold, 7 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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(Updated - June 12, 2015 8:55 AM EDT)

Oppenheimer upgraded Williams-Sonoma (NYSE: WSM) from Perform to Outperform with a price target of $90.00. Analyst Brian Nagel is optimistic that a more powerful upswing in residential real estate will help fuel further acceleration in home-related sales.

"For a long while we have looked upon Home Retail as particularly well positioned within the Hardlines sector for the current economic environment. We undertook a review of the tenets of our long-held positive posture toward the group and the myriad operational nuances of the sector’s leading chains. Our conclusions: 1) Recent upticks in home sales and household formation suggest the potential for further improvements in demand for home-related goods; 2) More aggressive price promotions lately are likely to weigh somewhat upon margins at leading Home Accessory chains; and 3) Despite persistent market jitters, shares of HD (NYSE: HD) and LOW (NYSE: HS) are apt to perform well even as rates rise," said the analyst.

Nagel's near-term picks include Home Depot, Lowe's Cos, and Williams-Sonoma. He also is favorably on longer term prospects for Pier 1 Imports (NYSE: PIR) and Bed Bath & Beyond (NASDAQ: BBBY), though he doesn't see a clear positive near-term catalyst. All five stocks are rated Outperform.

Nagel' added, "WSM has represented a “wish list” stock for us for a while. We view the chain as particularly well positioned to capitalize upon potentially improving demand trends within the Home Retail category. The WSM omni-channel model is a strong differentiator and profit driver and increasingly the model for most other chains. Abating West Coast port issues should make for a driver of better sales and EPS near term."

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 $79.23 yesterday.



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