Barrington Research Initiates Coverage On Home Furnishing Companies

In a note released Monday, Barrington Research analyst Kristine Koerber initiated coverage on the following companies.

Ethan Allen
Koerber initiated coverage of Ethan Allen Interiors ETH with a Market Perform rating and has not yet set a price target.

The big takeaway from her outlook on the company was to use caution in the near-term and expect growth over the long-term. Koerber pointed to Ethan Allen's current repositioning of its merchandise to target a much broader demographic as the reason for the near-term caution. She noted, as with all major merchandising shifts, the company is open to execution risk.

Looking forward, Koerber forecasts "long-term sales growth of mid- to high-single digits and EPS growth of mid to high teens" upon the successful completion of its repositioning efforts.

Haverty Furniture Companies
Koerber initiated coverage on Haverty Furniture Companies HVT with an Outperform rating and a $30 price target.

"We find the company's exclusive product mix, strong advertising, top-notch customer service and strong market penetration appealing in a highly fragmented industry," wrote Koerber.

In terms of growth, Koerber is looking for the company to "increase sales per square foot through merchandising" and "improve store productivity." She noted the company is not a story of unit growth, but rather is able to increase its sales base ~25 percent in its current infrastructure.

La-Z-Boy
Koerber initiated coverage of La-Z-Boy LZB with an Outperform rating and a $30 price target.

Koerber believes La-Z-Boy has significant room for growth both in its demographics and its units. In regard to its target demographics, Koerber noted the company's recent launch of its "Urban Attitudes" line "could be a meaningful driver to La-Z-Boy's business over the long-term."

Additionally, she believes that the company is "under penetrated" in many areas and says La-Z-Boy could double its EPS in the next four to five years based on store growth in the mid-single digits over the next several years.

Pier 1 Imports
Koerber initiated coverage on Pier 1 Imports PIR with a Market Perform rating and has not yet set a price target.

Koerber believes the company has an "attractive operating model" and is "well positioned for market share gains over the long term." With that in mind, she recommends caution in the near-term until it becomes more clear that growth has re-accelerated.

To support her near-term caution, Koerber noted that the company's three-year growth plan turned into a four-year plan after "weak" performance in the fourth quarter.

Williams-Sonoma
Koerber initiated coverage on Williams-Sonoma WSM with an Outperform rating and an $80 price target.

Koerber called Williams-Sonoma a "true multi-channel" retailer and noted that its online segment now accounts for 50 percent of the business as a whole.

"We believe the company can generate EPS growth of at least 10-15 percent, driven by supply chain efficiencies and operating leverage. We project top-line growth of at least mid single digits for the next several years," Koerber wrote.