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