Williams-Sonoma (WSM) PT Raised to $180 at Evercore ISI
Evercore ISI analyst Oliver Wintermantel raised the price target on Williams-Sonoma (NYSE: WSM) to $180.00 (from $140.00) while maintaining a In Line rating.
The analyst comments "Another margin beat and Williams-Sonoma stock exploded +30%, or up over 70% YTD. Continued improvements in sales trends, mkt share gains and strong profits are propelling the stock higher. The company guided to ~18% operating margins in 2024, which is in line with its long-term mid-to high teens guidance. Comps sequentially improved further from 1H (still down LSD), reflective of better performance in furniture & continued growth in non-furniture categories. Gross margins grew 240bps, significantly exceeding expectations. We don’t expect margins to fall substantially from here, as the underlying drivers are still intact, but further margin growth will be harder to come by as the company started cycling easier compares. The reality is the longer comps stay negative, the harder it is to sustainably increase margins. Margins were raised for the year, flowing through the 3Q beat. 4Q margins should be flat y/y, excl. the benefit of the 53rd week. Bears focus on margins already at the l-t guide, falling comps in a frozen housing market, tariff risks (fig 7) and all-time high valuation (fig. 10). Bulls can point to share gains, expanding margins despite the negative comp and improving comp trends. On our end, we’re raising our 2024 est ($8.20) by the beat and believe HF demand (and WSM comps) can turn modestly positive in 2025. Our Base Case of $180 assumes a market multiple on growing ‘25e earnings of $8.50/share. A market multiple is a premium to WSM’s typical multiple but warranted given the elevated and stable margins – and the outlook for recovering comps in ’25. We see the appeal of WSM once a broader big ticket/discretionary Home Furnishing recovery is more readily apparent."